1. Lecture 13 Assoc. Prof. Sencer Ecer HEALTH ECONOMICS
Medical Malpractice
Lecture 13
Assoc. Prof. Sencer Ecer
HEALTH ECONOMICS

2. Medical Malpractice in the US
Very controversial
A costly issue
Malpractice insurance, legal fees
From a game-theoretic point of view, doctors don’t have incentives to fight back, because trying to set a reputation as tough is a public good
So free-riding problem etc.
However, malpractice insurers may have such incentives
Another example of malpractice: pharmacist errors

3. Risk prevention game Box 13.2
Learned Hand (this is actually the name of a Judge) Rule
Negligence is when a doctor fails to take some action to prevent harm and when it would on average cost less to prevent the harm than the costs of the harm itself
With injury prevention 100+C, C is cost of action, 100 is damage
Without injury prevention, 200 in damage
What does the Learned Hand rule imply about C?

4. Risk prevention game Spend C each if C< (200-100)=100
See the table, if C>5, then Dr. A’s choice of do not prevent is dominant strategy. It is lowest cost.
100+C>105 and 195+C>200
Dr. A will choose Prevent at all times iff C<5