Optimal prevention when informal penalties matter: The case of medical errors

Sverre Grepperud

No 2007:5, HERO Online Working Paper Series from University of Oslo, Health Economics Research Programme

Abstract: Individuals often respond with strong emotions to being penalised. Such responses suggest that informal penalties are important and play a role in creating deterrence. In this paper informal penalties are analysed in the context of medical errors. The introduction of informal penalties, if dependent upon formal ones, implies that: (i) the optimal enforcement regime becomes more lenient, and in some cases the lack of formal punishment is preferred, (ii) the first-best solution becomes unattainable, (iii) liability rates and formal penalty level are no longer perfect deterrence substitutes. In addition, powers of informal penalties provide a rationale for administrative sanctions (informal criticism, reprimands and warnings).

Keywords: Iatrogenic injury; enforcement; administrative sanctions (search for similar items in EconPapers)
JEL-codes: D64 I18 K32 K42 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2009-06-03
New Economics Papers: this item is included in nep-hea and nep-neu
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Related works:
Journal Article: Optimal Prevention when Informal Penalties Matter: The Case of Medical Errors (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:oslohe:2007_005

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