How to effectively combine performance pay with the traditional payment methods capitation and fee-for-service to improve the quality of care is not well understood. To establish a systematic comparison of physicians’ behavior under these payment methods, we employ a parsimonious experimental...

A central concern in health economics is to understand the influence of commonly used physician payment systems. We introduce a controlled laboratory experiment to analyze the influence of fee-for-service (FFS) and capitation (CAP) payments on physicians' behavior. Medical students decide as...

Recent reforms in health care have introduced a variety of pay-for-performance programs using financial incentives for physicians to improve the quality of care. Their effectiveness is, however, ambiguous as it is often difficult to disentangle the effect of financial incentives from the ones of...

There is considerable controversy about what causes (in)effectiveness of physician performance pay. Using a behavioral experiment with a representative sample of German primary-care physicians, we study the incentive effect of performance pay on service provision and quality of care. To explain...