Curing is caring? Liability reforms, defensive medicine and malpractice litigation in a post-pandemic world

We analyze different scenarios of defensive medicine in a unique game theoretic framework, representing a healing relationship between a physician and a patient. The physician should choose between providing the optimal treatment or an inferior one, which can amount to practicing defensive medicine. The patient should choose whether to litigate or not, if an adverse event occurs. When both agents have no dominant strategy, we obtain four scenarios representing the positive and negative forms of defensive medicine, with or without physician's moral hazard. We find that certain legal parameters can have opposite effects on the probabilities that physicians practice defensive medicine and that patients litigate, depending respectively on the form of defensive medicine and on the presence of moral hazard. This result can explain the ambiguous results, reported in empirical literature, of legal reforms aimed at discouraging defensive medicine and medical malpractice litigation.