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Dynamic Incentives (dynamic + incentive)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

A Dynamic Incentive-Based Argument for Conditional Transfers,

THE ECONOMIC RECORD, Issue 2008
DILIP MOOKHERJEE
We compare the long-run effects of replacing unconditional transfers to the poor by transfers conditional on the education of children. Unlike Mirrlees' income taxation model, the distribution of skill evolves endogenously. Human capital accumulation follows the Freeman,Ljungqvist,Mookherjee,Ray OLG model with missing capital markets and dynastic bequest motives. Conditional transfers (funded by taxes on earnings of the skilled) are shown to induce higher long-run output per capita and (both utilitarian and Rawlsian) welfare, owing to their superior effect on skill accumulation incentives. The result is established both with two skill levels, and a continuum of occupations. [source]

Suspense: Dynamic Incentives in Sports Contests,

THE ECONOMIC JOURNAL, Issue 534 2009
William Chan
In a dynamic model of sports competition, if spectators care only about contestants' efforts, incentive schemes depending linearly on the final score difference dominate rank order schemes based only on who wins. If spectators also care about suspense, defined as valuing more contestants' efforts when the game is closer, rank order schemes can dominate linear score difference schemes, and this will be the case when the demand for suspense is sufficiently high. Under additional assumptions, we show that the optimal rank order scheme dominates a broad class of incentive schemes. [source]

Key Factors of Joint-Liability Loan Contracts: An Empirical Analysis

KYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 2 2005
Alexander S. Kritikos
Summary This paper provides an empirical analysis of joint-liability micro-lending contracts. Using our data set, we examine the efficacy of various incentives set by this contract such as joint-liability between groups of borrowers or group access to future and to larger loans. As proposed by theory, we find that joint liability induces a group formation of low risk borrowers. After the loan disbursement, the incentive system leads to peer monitoring, peer support and peer pressure between the borrowers, thus helping the lending institution to address the moral hazard and enforcement problem. This paper also demonstrates that the mechanism realizes repayment rates of nearly 100% if the loan officers fulfill their complementary duties in the screening and enforcement process. Finally, we make clear that dynamic incentives, in contrast to theory, have to be restricted if the two long-term problems of the joint-liability approach, i.e. its mismatching problem and the domino effect, are to be tackled notably. [source]

Managerial expertise, learning potential and dynamic incentives: get more for less?

MANAGERIAL AND DECISION ECONOMICS, Issue 3 2007
Christian LukasArticle first published online: 16 APR 200
In this paper the impact of ability and learning potential on incentive contracts is analyzed. A central feature of the model is that the true ability will not be revealed. The learning potential of an agent is modeled as the magnitude of impact on the agent's expected ability that learning-by-doing has in a given task. Absent a managerial labor market, depending on an agent's learning potential, a monotone or non-monotone pay structure may be optimal. The second important result is that using agents' ability distributions as inputs to information systems, higher learning potentials lead to less costly information systems, i.e. actions can be implemented at lower costs. Additionally, it is proven that the criteria cost minimization and value maximization are equivalent in the model's context. Copyright © 2007 John Wiley & Sons, Ltd. [source]