Medical Errors: Getting the Incentives Right



This work examines the role of penalties as providers of incentives to prevent medical errors and ensure that such incidents, once they occur, become common knowledge. It is shown that a scheme with two penalties (accountability and non-report) induces the first-best solution. However, this scheme does not necessarily imply a punitive environment, but may, under given circumstances, yield insignificant and even negative penalties. Alternative sanction systems, such as voluntary reporting and immunity, are found to have less desirable properties. An exception is confidentiality (anonymity) which turns out to be an optimal scheme. Finally, the examination of various penalty restrictions (scope and scale) shows that such barriers may promote both tougher and softer sanction schemes.


reporting incentives immunity confidentiality voluntary reporting 


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Copyright information

© Springer Science + Business Media, Inc. 2005

Authors and Affiliations

  1. 1.Institute of Health Management and Health EconomicsUniversity of OsloOsloNorway

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