Incentives Beyond the Money and Motivational Capital in Health Care Organizations
This paper explores the conditions that characterize the optimality for a principal (health manager) to undertake investments to motivate agents (doctors). In the model, doctors are intrinsically motivated and can have different identities. We develop a principal agent dynamical model with moral hazard, which captures the possibility of affecting doctors’ intrinsic motivation and identity through contracts offered by the health manager. Identity and intrinsic motivation of the doctor can be undermined (crowding-out) or enhanced (crowding-in) by incentive policies and monetary rewards. When motivations beyond the money play a role in the agents behaviour, the optimality of the equilibrium outcomes may be altered. Intrinsic motivation is defined as doctor’s experienced enjoyment from doing her work and commit toward a mission. By “full” identity we mean a situation in which the doctor shares the organizational objectives and views herself as a part of the organization. We assume that “full” identity can be achieved when health managers include mission supportive investments in contracts. This also crowds in intrinsic motivation. However, crowding out occurs when the health manager uses only pure monetary rewards to incentivize doctors with the goal of drive their actions in his own interest. Solving the model, we are allowed to make comparative statics and discuss the conditions under which spending resources to invest in motivational capital, is optimal for the health organization’s manager. Our results may help to inform policy-makers about optimal policy design and optimal management of health organizations. For instance, we conclude that investing in motivational capital is more likely to be profitable in the long run whereas mere monetary incentives are more likely to be optimal in the short run.
|Date of creation:||2012|
|Date of revision:|
|Publication status:||Published in|
|Contact details of provider:|| Postal: Campus de Arrosadía - 31006 Pamplona (Spain)|
Phone: 34 948 169340
Fax: 34 948 169 721
Web page: http://www.econ.unavarra.es
|Order Information:|| Postal: Papers are not sent in a centralized mode. You can download them with ftp, or contact the authors.|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ernst Fehr & Alexander Klein & Klaus M Schmidt, 2007.
"Fairness and Contract Design,"
Econometric Society, vol. 75(1), pages 121-154, 01.
- Fehr, Ernst & Klein, Alexander & Schmidt, Klaus M., 2007. "Fairness and contract design," Munich Reprints in Economics 20618, University of Munich, Department of Economics.
- Fehr, Ernst & Klein, Alexander & Schmidt, Klaus M., 2005. "Fairness and Contract Design," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 67, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Mellström, Carl & Johannesson, Magnus, 2005.
"Crowding Out in Blood Donation: Was Titmuss Right?,"
Working Papers in Economics
180, University of Gothenburg, Department of Economics, revised 08 Feb 2008.
- Carl Mellström & Magnus Johannesson, 2008. "Crowding Out in Blood Donation: Was Titmuss Right?," Journal of the European Economic Association, MIT Press, vol. 6(4), pages 845-863, 06.
- Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999.
"The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies,"
Review of Economic Studies,
Oxford University Press, vol. 66(1), pages 199-217.
- Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The economics of career concerns: part 2 :application to missions and accountability of government agencies," ULB Institutional Repository 2013/9641, ULB -- Universite Libre de Bruxelles.
- Barros, Pedro Pita, 2003. "Cream-skimming, incentives for efficiency and payment system," Journal of Health Economics, Elsevier, vol. 22(3), pages 419-443, May.
- Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999.
"The economics of career concerns: part 1 :comparing information structures,"
ULB Institutional Repository
2013/9617, ULB -- Universite Libre de Bruxelles.
- Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part I: Comparing Information Structures," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 183-198.
- Timothy Besley & Maitreesh Ghatak, 2003.
"Competition and incentives with motivated agents,"
LSE Research Online Documents on Economics
2202, London School of Economics and Political Science, LSE Library.
- Tim Besley & Maitreesh Ghatak, 2005. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics 928, London School of Economics and Political Science, LSE Library.
- Besley, Timothy J. & Ghatak, Maitreesh, 2004. "Competition and Incentives with Motivated Agents," CEPR Discussion Papers 4641, C.E.P.R. Discussion Papers.
- Kevin Murdock, 2002. "Intrinsic Motivation and Optimal Incentive Contracts," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 650-671, Winter.
- Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
- Le Grand, Julian, 2006. "Motivation, Agency, and Public Policy: Of Knights and Knaves, Pawns and Queens," OUP Catalogue, Oxford University Press, number 9780199298914, June.
When requesting a correction, please mention this item's handle: RePEc:nav:ecupna:1201. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Javier Puértolas)
If references are entirely missing, you can add them using this form.