Motivational Capital and Incentives in Health Care Organisations
AbstractThis paper explores optimal incentive schemes in public health institutions when agents (doctors) are intrinsically motivated. We develop a principal-agent dynamic model with moral hazard in which agents’ intrinsic motivation could be promoted (crowding-in) by combining monetary and non-monetary rewards. Intrinsic motivation could also be discouraged (crowding-out) when the health manager uses only monetary incentives. We discuss the conditions under which investing in doctors’ motivational capital by the use of well designed nonmonetary rewards is optimal for the health organizations manager. Our results show that such investments will be more efficient than pure monetary incentives in the long run. We will also prove that when doctors are risk-averse, it is profitable for the health manager to invest in motivational capital.
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Bibliographic InfoPaper provided by Departamento de Economía - Universidad Pública de Navarra in its series Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra with number 1209.
Length: 43 pages
Date of creation: 2012
Date of revision:
Publication status: Published in
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Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
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