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

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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

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To link to this item 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
Refereed:Yes
Divisions:Faculty of Life Sciences > School of Agriculture, Policy and Development > Economic and Social Sciences Division > Food Economics and Marketing (FEM)
Faculty of Life Sciences > School of Agriculture, Policy and Development > Economic and Social Sciences Division > Agricultural and Food Investigational Team (AFIT)
ID Code:66341
Publisher:Elsevier

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