An experimental study on the effect of co-payment in public services

Garcia-Gallego, A., Georgantzis, N., Jaber-Lopez, T. and Stafiero, G. (2016) An experimental study on the effect of co-payment in public services. Journal of Behavioral and Experimental Economics, 65. pp. 109-116. ISSN 2214-8043 doi: 10.1016/j.socec.2016.08.002

Abstract/Summary

This paper aims to shed light on the impacts of imposing co-payment on public services, a strategy increasingly employed in the realm of publicly provided healthcare. We analyze the effect of imposing a charge for the individual appropriation of common resources. In our design, withdrawing the maximum amount is the dominant strategy for every player, but the resulting equilibrium is socially inefficient. We find that the presence of a price that is small enough to leave intact the conflict between individual incentives and collective welfare is not effective in reducing appropriation among agents who have previously been acting without it. In fact, the upward trend in the average extraction of common funds continues after the introduction of a price. In an alternative treatment in which we impose co-payment from the outset of the experiment, withdrawals are lower than in the free-access baseline. Our results provide insights on the conditions for the effectiveness of co-payment in curbing the over-consumption of public resources.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/66341
Identification Number/DOI	10.1016/j.socec.2016.08.002
Refereed	Yes
Divisions	Life Sciences > School of Agriculture, Policy and Development > Department of Agri-Food Economics & Marketing Life Sciences > School of Agriculture, Policy and Development > Department of Agri-Food Economics & Marketing > Agricultural and Food Investigational Team (AFIT)
Publisher	Elsevier
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