Abstract
We study how the heterogeneity in responses to performance pay can be explained by personality traits. We utilize data from behavioral experiments and surveys on personality traits with physicians, medical students, and non-medical students. Performance pay is introduced at a within-subject level and complements either fee-for-service or capitation. We find that the payment system matters regarding the behavioral impact of personality traits. More conscientious and more agreeable individuals provide higher quality of care under capitation. Although performance pay further improves the quality, more conscientious and agreeable individuals respond less to capitation-based performance pay. Other personality traits are not behaviorally relevant. Under fee-for-service-based schemes, personality traits do not significantly related to individuals’ behavior. Our findings inform the incentive design for physicians and the potential sorting into incentive schemes based on personality traits.
JEL-Classification: C91, I11
Keywords: Fee-for-service, capitation, blended pay for performance, personality traits, quality of care, heterogeneity