An Overview of Incentive Contracting

Incentives in Organizations: An Overview of Some of the Evidence and Theory

This paper begins with a review of the different forms of evidence on incentives in organizations. It is argued that it is not possible to understand modern organizations using one kind of data or empirical model. There is a need to combine standard regression studies with survey and laboratory evidence to obtain a complete picture of how modern organizations operate. The evidence that we have ...

173-187 Gaechter Spr 09.indd

The authors present a simple classroom experiment that can be used as a teaching device to introduce important concepts of organizational economics and incentive contracting. First, students take the role of a principal and design a contract that consists of a fixed payment and an incentive component. Second, students take the role of agents and decide on an effort level. The experiment illustr...

Medicare and Medicaid programs; requirements for physician incentive plans in prepaid health care organizations--HCFA. Final rule.

This final rule amends the regulations established by a March 27, 1996, final rule with comment period. The regulations govern physician incentive plans operated by Federally-qualified health maintenance organizations and competitive medical plans contracting with the Medicare program, and certain health maintenance organizations and health insuring organizations contracting with the Medicaid p...

An Analysis of the Use of Incentive/disincentive Contracting Provisions for Early Project Completion

Design a Contract! A Simple Principal-Agent Problem as a Classroom Experiment

We present a simple classroom principal-agent experiment that can effectively be used as a teaching device to introduce important concepts of organizational economics and contracting. In a first part, students take the role of a principal and design a contract that consists of a fixed payment and an incentive component. In the second part, students take the role of agents and decide on an effor...

A Model for Sharing the Costs of Uncontrollable Risks among Contracting Parties

The allocation of risks among the contracting parties in a contract is an important decision affecting the project success. Some risks in a project are uncontrollable; these are imposed to a project by external factors. Since contracting parties can neither control nor affect the occurrence of such risks, their allocation to a party would be inequitable. Therefore the cost overrun related to un...