We study how legal and financial incentives affect medical decisions. Using patient-level data, we identify the effect of a change in medical liability pressure exploiting the geographical distribution of hospitals across court districts, where some districts improve the certainty of expected...

In health care, overuse and underuse of medical treatments represent equally dangerous deviations from an optimal use equilibrium and arouses concerns about possible implications for patients' health, and for the healthcare system in terms of both costs and access to medical care. Medical...