This paper studies the provision of incentives in a large U.S. training organization which is divided in about 50 independent pools of training agencies. The number and the size of the agencies within each pool vary greatly. Each pool distributes performance incentive awards to the training agencies it supervises, subject to two constraints: the awards cannot be negative and the sum of the awards cannot exceed an award budget. We characterize the optimal award function and derive simple predictions about how award prizes should depend on the number of agencies, on their sizes, and on their performances. Our results indicate that the constraints on the award distribution bind and reduce the overall efficiency of the incentive system.
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Paper provided by University at Albany, SUNY, Department of Economics in its series Discussion Papers with number
00-11.
Length: Date of creation: 2000 Date of revision: Handle: RePEc:nya:albaec:00-11
Contact details of provider: Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A. Phone: (518) 442-4735 Fax: (518) 442-4736
Order Information: Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A. Email: Web: http://www.albany.edu/econ/dp/index.html
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Find related papers by JEL classification: O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D O34 - Economic Development, Technological Change, and Growth - - Technological Change - - - Intellectual Property Rights
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