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Incentives for Motivated Agents under an Administrative Constraint

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  • Miltiadis Makris

    (Department of Economics, University of Exeter and CMPO, University of Bristol)

Abstract

Consider an agent who has an expertise in producing a non-marketable good. This good is valued by a single principal, and there is a veri able measure of the agent's performance. Crucially, the agent is intrinsically motivated, due to `warm glow altruism'. In addition, the agent's budget, which is controlled by the principal, must not be less than the monetary performance-cost faced by the agent. This gives rise to a limited-liability constraint. It also restricts the agent's ability to under-report costs. In such environment, we determine the link between the agent's budget and performance. Our results come in contrast to the received solution of the principal-agent problem, and to most in the literature on mission-motivated organisations and public services provision.

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Bibliographic Info

Paper provided by Exeter University, Department of Economics in its series Discussion Papers with number 0601.

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Date of creation: Feb 2006
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Handle: RePEc:exe:wpaper:0601

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Web page: http://business-school.exeter.ac.uk/about/departments/economics/
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Keywords: Mission-orientated Organisations; Asymmetric Information; Administrative Constraint;

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References

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Citations

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Cited by:
  1. Dietrichson, Jens, 2013. "Coordination Incentives, Performance Measurement and Resource Allocation in Public Sector Organizations," Working Papers 2013:26, Lund University, Department of Economics.
  2. Liu, Ting & Ma, Ching-to Albert, 2013. "Health insurance, treatment plan, and delegation to altruistic physician," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 79-96.
  3. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2012. "Can competition reduce quality?," NIPE Working Papers 05/2012, NIPE - Universidade do Minho.
  4. Miltiadis Makris, 2006. "Political authority, expertise and government bureaucracies," Public Choice, Springer, vol. 127(3), pages 267-284, June.
  5. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2012. "Quality competition with profit constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 642-659.
  6. Arce, Daniel G., 2013. "Principals’ preferences for agents with social preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 154-163.
  7. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2014. "Hospital Mergers with Regulated Prices," NIPE Working Papers 10/2014, NIPE - Universidade do Minho.

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