TY  - JOUR
AU  - Encinosa,William E.,III
AU  - Gaynor,Martin
AU  - Rebitzer,James B.
TI  - The Sociology of Groups and the Economics of Incentives: Theory and Evidence on Compensation Systems
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5953
PY  - 1997
Y2  - March 1997
UR  - http://www.nber.org/papers/w5953
L1  - http://www.nber.org/papers/w5953.pdf
N1  - Author contact info:
Martin Gaynor
Heinz College
Carnegie Mellon University
4800 Forbes Avenue,,Room 3008
Pittsburgh, PA 15213-3890
Tel: 412/268-7933
Fax: 412/268-5338
E-Mail: mgaynor@cmu.edu

James B. Rebitzer
Professor of Management, Economics, Public Policy
Markets, Public Policy and Law Department
Boston University School of Management
595 Commonwealth Ave.
Boston, MA 02215
Tel: 617-383-7356
Fax: NA
E-Mail: rebitzer@bu.edu
AB  - This paper incorporates the sociological concept of group norms' into an economic analysis of pay systems.  We use a behavioral microeconomic model and a unique survey of medical groups to examine the theoretical and empirical relationship between group norms and incentive pay.  Our  findings suggest that, at least for medical groups, norms are binding constraints in the choice of pay practices.  While group norms matter, the patterns in the data suggest that they are not all that matters.  Analysis of the preferences and activities of individual physicians indicate that factors highlighted by the economic theory of agency, notably income insurance and multi-task considerations, also shape pay policies.  The conclusion we draw from these results is that the sociological concept of group norms augments rather than replaces more conventional economic analyses of pay practices.
ER  -