IDEAS home Printed from https://ideas.repec.org/a/bla/randje/v51y2020i1p301-317.html

Push or pull? Performance‐pay, incentives, and information

Author

Listed:
  • David Rietzke
  • Yu Chen

Abstract

We study a principal‐agent model wherein the agent is better informed of the prospects of the project, and the project requires both an observable and unobservable input. We characterize the optimal contracts, and explore the trade‐offs between high‐ and low‐powered incentive schemes. We discuss the implications for push and pull programs used to encourage Research and Development (R&D) activity, but our results are relevant in other contexts.

Suggested Citation

  • David Rietzke & Yu Chen, 2020. "Push or pull? Performance‐pay, incentives, and information," RAND Journal of Economics, RAND Corporation, vol. 51(1), pages 301-317, March.
    • Handle: RePEc:bla:randje:v:51:y:2020:i:1:p:301-317
    DOI: 10.1111/1756-2171.12314
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1756-2171.12314
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1756-2171.12314?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gamba, Simona & Magazzini, Laura & Pertile, Paolo, 2021. "R&D and market size: Who benefits from orphan drug legislation?," Journal of Health Economics, Elsevier, vol. 80(C).
    2. Rosella Levaggi & Paolo Pertile, 2021. "A reply to “Who would benefit from average value‐based pricing?”," Health Economics, John Wiley & Sons, Ltd., vol. 30(9), pages 2284-2286, September.
    3. Bo Chen & Yu Chen & David Rietzke, 2017. "Simple Contracts under Observable and Hidden Actions," Graz Economics Papers 2017-07, University of Graz, Department of Economics.
    4. Daniel Reiter, 2020. "Socioeconomic Integration through Language: Evidence from the European Union," Graz Economics Papers 2020-15, University of Graz, Department of Economics.
    5. Meng Wei Chen & Yu Chen & Zhen-Hua Wu & Ningru Zhao, 2018. "Government Intervention, Innovation, and Entrepreneurship," Graz Economics Papers 2018-15, University of Graz, Department of Economics.
    6. Bo Chen & Yu Chen & David Rietzke, 2020. "Simple contracts under observable and hidden actions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(4), pages 1023-1047, June.

    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
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:randje:v:51:y:2020:i:1:p:301-317. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/randdus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.