Competition, Conformism and the Low Adoption of a Generous Pricing Scheme Offered to Physicians

This paper proposes a structural econometric approach to examine how individual decisions are influenced by various sources of interaction, modeled through a multiplex network. Specifically, we develop a binary choice model under incomplete information that captures two distinct micro-founded interaction mechanisms: spatial competition and conformity to social norms. We apply our game theoretical framework to analyze the choices made by private physicians regarding the adoption of a new pricing scheme in France, designed to enhance patient access to care while being economically beneficial for most physicians. Our analysis utilizes a unique geolocalized dataset that covers the entire population of physicians across three medical specialties. We find compelling evidence of a significant preference for conformity, while competitive interactions in physician decision appear minimal. These findings largely explain the low adoption rates of the new pricing scheme, as simulations and counterfactual analyses suggest that a substantially higher uptake rate would occur if physicians operated in isolation or were indifferent to conformity. Lastly, we discuss the implications of neglecting relevant sources of interaction in a structural model, which can lead to ineffective policy design.