Using artefactual field and lab experiments to investigate how fee-for-service and capitation affect medical service provision

Abstract

We analyze how physicians, medical students, and non-medical students respond to financial incentives from fee-for-service and capitation. We employ a series of artefactual field and conventional lab experiments framed in a physician decision-making context. Physicians, participating in the field, and medical and non-medical students, participating in lab experiments, respond to the incentives in a consistent way: Significantly more medical services are provided under fee-for-service compared to capitation. The intensity by which subjects respond to incentives, however, differs by subject pool. Our findings are robust regarding subjects’ gender, age, and personality traits.