Pricing in vitro Fertilization Procedures

Health Economics, 2009

Anthony Dukes and Rajeev K. Tyagi


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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