Setting Efficient Incentives for Agricultural Research: Lessons from Principal-Agent Theory
AbstractA conceptual analysis of important issues in the organization and management of academic research is presented. Principal-agent theory is applied to derive optimal compensation schemes for scientists when they differ in ability, risk aversion, cost of effort, and reservation utility, and to show the optimal trade-off between institutional risk and scientists' abilities. Implications for an efficient organization of research are derived, including how scientists' incentives should be structured to elicit optimal research efforts and direction, whether research direction should be centralized or decentralized, and whether the organization of research should be through external competitive grants or program and institutional funding.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 5040.
Date of creation: 01 Nov 2000
Date of revision:
Publication status: Published in American Journal of Agricultural Economics, November 2000, vol. 82, pp. 828-841
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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Other versions of this item:
- Wallace E. Huffman & Richard E. Just, 2000. "Setting Efficient Incentives for Agricultural Research: Lessons from Principal-Agent Theory," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 828-841.
- Huffman, Wallace & Just, Richard E., 1998. "Setting Efficient Incentives for Agricultural Research: Lessons from Principal-Agent Theory," Staff General Research Papers 1389, Iowa State University, Department of Economics.
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- Dana G. Dalrymple, 2008. "International agricultural research as a global public good: concepts, the CGIAR experience and policy issues," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(3), pages 347-379.
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- Just, Richard E. & Huffman, Wallace E., 2009. "The economics of universities in a new age of funding options," Research Policy, Elsevier, vol. 38(7), pages 1102-1116, September.
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- Huffman, Wallace, 2009. "Does Information Change Behavior?," Staff General Research Papers 13128, Iowa State University, Department of Economics.
- Ekboir, Javier M. & Espinosa Garcia, Jose Antonio & Espinoza Arellano, Jose de Jesus & Moctezuma Lopez, Georgel & Naranjo, Alfredo Tapia, 2003. "Analisis del sistema Mexicano de investigacion agropecuaria," Economics Working Papers 7684, CIMMYT: International Maize and Wheat Improvement Center.
- Olmos, Marta Fernandez & Martinez, Jorge Rosell, 2010. "The Quality-Quantity Trade-off in the Principal-Agent Framework," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 11(1), January.
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