An experimental study on the effect of co-payment in public services

- We study the effect of a co-payment as an access fee for the use of a common resource.
- In the no-fee baseline, extraction is inefficiently high.
- When subjects have a no-fee past, the introduction of a co-payment does not mitigate extraction inefficiencies.
- When co-payment is introduced from the beginning, extraction is significantly lower than in the no-fee baseline.

This paper aims to shed light on the impacts of imposing co-payment on public services, a strategy increasingly employed in the realm of publicly provided healthcare. We analyze the effect of imposing a charge for the individual appropriation of common resources. In our design, withdrawing the maximum amount is the dominant strategy for every player, but the resulting equilibrium is socially inefficient. We find that the presence of a price that is small enough to leave intact the conflict between individual incentives and collective welfare is not effective in reducing appropriation among agents who have previously been acting without it. In fact, the upward trend in the average extraction of common funds continues after the introduction of a price. In an alternative treatment in which we impose copayment from the outset of the experiment, withdrawals are lower than in the free-access baseline. Our results provide insights on the conditions for the effectiveness of co-payment in curbing the over-consumption of public resources.