The Sociology of Groups and the Economics of Incentives: Theory and Evidence on Compensation Systems

47 Pages Posted: 6 Dec 2005

See all articles by William E. Encinosa

William E. Encinosa

U.S. Department of Health and Human Services - Agency for Healthcare Research and Quality - Center for Delivery, Organization and Markets

Martin Gaynor

Carnegie Mellon University; National Bureau of Economic Research (NBER); Leverhulme Centre for Market and Public Organisation

James B. Rebitzer

Boston University School of Management; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; Bard College - The Levy Economics Institute

Multiple version iconThere are 2 versions of this paper

Date Written: November 2005

Abstract

When working together, people engage in non-contractual and informal interactions that constitute the sociology of the group. We use behavioral models and a unique survey of medical groups to analyze how group sociology influences physician incentive pay and behavior. We conclude that informal interactions among group members influence pay practices and behaviors, but the relationship is complex. No single aspect of group sociology is entirely consistent with all the patterns in the data. Factors emphasized in the economic theory of agency, notably risk aversion, also shape pay policies but these factors cannot account for all the observed empirical relationships.

Keywords: incentives, social norms, physicians

JEL Classification: L20, I11, J33, D21, J44

Suggested Citation

Encinosa, William E. and Gaynor, Martin and Rebitzer, James B., The Sociology of Groups and the Economics of Incentives: Theory and Evidence on Compensation Systems (November 2005). IZA Discussion Paper No. 1851. Available at SSRN: https://ssrn.com/abstract=11001

William E. Encinosa

U.S. Department of Health and Human Services - Agency for Healthcare Research and Quality - Center for Delivery, Organization and Markets ( email )

540 Gaither Road
Rockville, MD 20850
United States

Martin Gaynor

Carnegie Mellon University ( email )

H. John Heinz III School of Public Policy
and Management
Pittsburgh, PA 15213-3890
United States
412-268-7933 (Phone)
412-268-5338 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Leverhulme Centre for Market and Public Organisation

12 Priory Road
Bristol BS8 1TN
United Kingdom

James B. Rebitzer (Contact Author)

Boston University School of Management ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
617 353 4605 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Bard College - The Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
170
Abstract Views
1,630
rank
142,403
PlumX Metrics