Norm-Indexed Physician Pay: Embedding Elicited Professional Norms into Mixed Payment Contracts

Brosig-Koch et al. (2015) show mixed payment systems can shape physician behavior, but current designs mostly tie incentives to measurable outputs (quantity/quality). This project brings in norm elicitation (Edirneligil & Tanhan, 2024) to measure injunctive professional norms—e.g., when watchful waiting is “appropriate,” acceptable test ordering thresholds by case-mix—and makes part of compensation contingent on alignment with these norms as perceived by peers and local clinical communities. The contract includes a “norm dividend”: a bonus activated when a physician’s treatment pattern falls within pre-registered peer-elicited ranges, adjusted for patient severity. We simulate spillovers and equilibrium outcomes with agent-based models (Gomes, 2022), allowing norms to evolve via reputation and feedback, and compare against standard mixed-payment benchmarks. Novelty: moves beyond metric-based pay-for-performance to pay-for-norm-concordance using independently elicited professional standards; anticipates social sanctioning and reputational dynamics that conventional contracts ignore. Impact: potentially reduces overtreatment/undertreatment without gaming hard metrics; offers a scalable, transparent mechanism to align incentives with professional ethics.

References:

1. The Effects of Introducing Mixed Payment Systems for Physicians: Experimental Evidence. Jeannette E. Brosig-Koch, H. Hennig-Schmidt, Nadja Kairies-Schwarz, Daniel Wiesen (2015). Health Economics.
2. Social Norms And Norm Elicitation In Behavioral Economics. A. Edirneligil, Esra Tanhan (2024). Sosyal Mucit Academic Review.
3. Behavioral economics and finance: a selective review of models, methods and tools. O. Gomes (2022). Studies in Economics and Finance.