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Incentives for motivated agents under an administrative constraint

Incentives for motivated agents under an administrative constraint
Incentives for motivated agents under an administrative constraint
Consider an agent who has an expertise in producing a non-marketable good. This good is valued by a single principal, and there is a verifiable measure of the agent’s performance. Crucially, the agent is intrinsically motivated due to ‘warm glow altruism’. In addition, the agent’s budget, which is controlled by the principal, must not be less than the monetary performance-cost faced by the agent. This gives rise to a limited-liability constraint. It also restricts the agent’s ability to under-report costs. In such environment, we determine the link between the agent’s budget and performance. Our results come in contrast to the received solution of the principal-agent problem and to most in the literature on mission-motivated organisations and public services provision.

mission-orientated organisations, asymmetric information, administrative constraint
0167-2681
428-440
Makris, Miltiadis
966df0dc-9caf-409e-9cbe-f2a800cdffda
Makris, Miltiadis
966df0dc-9caf-409e-9cbe-f2a800cdffda

Makris, Miltiadis (2009) Incentives for motivated agents under an administrative constraint. Journal of Economic Behavior & Organization, 71 (2), 428-440. (doi:10.1016/j.jebo.2009.03.013).

Record type: Article

Abstract

Consider an agent who has an expertise in producing a non-marketable good. This good is valued by a single principal, and there is a verifiable measure of the agent’s performance. Crucially, the agent is intrinsically motivated due to ‘warm glow altruism’. In addition, the agent’s budget, which is controlled by the principal, must not be less than the monetary performance-cost faced by the agent. This gives rise to a limited-liability constraint. It also restricts the agent’s ability to under-report costs. In such environment, we determine the link between the agent’s budget and performance. Our results come in contrast to the received solution of the principal-agent problem and to most in the literature on mission-motivated organisations and public services provision.

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More information

Published date: August 2009
Keywords: mission-orientated organisations, asymmetric information, administrative constraint
Organisations: Economics

Identifiers

Local EPrints ID: 173921
URI: http://eprints.soton.ac.uk/id/eprint/173921
ISSN: 0167-2681
PURE UUID: 926e8ab9-7017-41f9-8c23-25c7d08aa432

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Date deposited: 09 Feb 2011 09:28
Last modified: 14 Mar 2024 02:32

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Author: Miltiadis Makris

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