Pricing in vitro Fertilization Procedures

Health Economics, 2009

Anthony Dukes and Rajeev K. Tyagi

Abstract

This paper examines the economics of pricing practices at artificial reproductive clinics, which have introduced money-back guarantees (MBG’s) for in vitro fertilization (IVF). We identify incentives for clinics to offer MBG’s and evaluate the impact on couples’ choices and on social welfare. Introducing MBG’s allows a clinic to (i) segment couples simultaneously on their relative fertility and on risk preferences; (ii) offer quantity discounts to relatively infertile couples; and (iii) offer some risk-sharing to couples for this costly procedure, whose outcome is uncertain. Our results also show how the addition of MBG’s can affect overall social welfare.

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