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Different Strokes for Different Folks? Experimental Evidence on the Effectiveness of Input and Output Incentive Contracts for Health Care Providers with Varying Skills

Author

Listed:
  • Manoj Mohanan
  • Katherine Donato
  • Grant Miller
  • Yulya Truskinovsky
  • Marcos Vera-Hernández

Abstract

A central issue in designing incentive contracts is the decision to reward agents' input use versus outputs. The trade-off between risk and return to innovation in production can also lead agents with varying skill levels to perform differentially under different contracts. We study this issue experimentally, observing and verifying inputs and outputs in Indian maternity care. We find that both contract types achieve comparable reductions in postpartum hemorrhage rates, but payments for outputs were four times that of inputs. Providers with varying qualifications performed equivalently under input incentives, while providers with advanced qualifications may have performed better under output contracts.

Suggested Citation

  • Manoj Mohanan & Katherine Donato & Grant Miller & Yulya Truskinovsky & Marcos Vera-Hernández, 2021. "Different Strokes for Different Folks? Experimental Evidence on the Effectiveness of Input and Output Incentive Contracts for Health Care Providers with Varying Skills," American Economic Journal: Applied Economics, American Economic Association, vol. 13(4), pages 34-69, October.
    • Handle: RePEc:aea:aejapp:v:13:y:2021:i:4:p:34-69
    DOI: 10.1257/app.20190220
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    Cited by:

    1. Balbuzanov, Ivan & Gars, Jared & Stalinski, Mateusz & Tjernström, Emilia, 2025. "Incentivizing Engagement: Experimental Evidence on Journalist Performance Pay," CAGE Online Working Paper Series 763, Competitive Advantage in the Global Economy (CAGE).
    2. Isaac Mbiti & Mauricio Romero & Youdi Schipper, 2023. "Designing Effective Teacher Performance Pay Programs: Experimental Evidence from Tanzania," The Economic Journal, Royal Economic Society, vol. 133(653), pages 1968-2000.
    3. Singh, Neha S. & Kovacs, Roxanne J. & Cassidy, Rachel & Kristensen, Søren R. & Borghi, Josephine & Brown, Garrett W., 2021. "A realist review to assess for whom, under what conditions and how pay for performance programmes work in low- and middle-income countries," Social Science & Medicine, Elsevier, vol. 270(C).
    4. Balbuzanov, Ivan & Gars, Jared & Stalinski, Mateusz & Tjernstrom, Emilia, 2025. "Incentivizing Engagement : Experimental Evidence on Journalist Performance Pay," The Warwick Economics Research Paper Series (TWERPS) 1570, University of Warwick, Department of Economics.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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