The Theory of Incentives

Laffont, Jean‐Jacques; Martimort, David

doi:10.1515/9781400829453

Cited by 1,399 publications

(261 citation statements)

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“…We employ standard techniques from the regulation literature of Laffont and Tirole (, ) and the theory of incentives put forth by Laffont and Martimort (). In a more general and more abstract framework, Gottlieb and Moreira () study the optimal contracts under simultaneous moral hazard and adverse selection.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal compensation rule under provider adverse selection and moral hazard

Chen

2017

Health Economics

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Although healthcare provider payments have been studied extensively in the literature, little is known about the optimal compensation rule when, in addition to unobservable provider effort (moral hazard), the provider's ability type is also private information (adverse selection). We find that when only provider effort is unobservable, to induce the first-best outcome the optimal compensation rule requires zero fee-for-service. When both provider moral hazard and adverse selection exist, the first-best outcome will be infeasible. The second-best compensation rule entails combined use of capitation, fee-for-service, and pay-for-performance.

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Section: Literature Reviewmentioning

confidence: 99%

Optimal compensation rule under provider adverse selection and moral hazard

Chen

2017

Health Economics

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“…2 2 For the definition of observable but non‐verifiable variables in contract theory see e.g. Laffont and Martimort (2002). …”

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confidence: 99%

“…To achieve the first‐best allocation, a Nash implementation mechanism is needed. Laffont and Martimort (2002), for example, show that the simple incentive‐compatible contracts used in the adverse selection context with ex ante contracting perform quite well in the case of non‐verifiability and risk neutrality of the hospital. The above, however, is beyond the scope of this paper.…”

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confidence: 99%

Investment in Hospital Care Technology Under Different Purchasing Rules: A Real Option Approach

Levaggi

Moretto

2008

Bulletin of Econ Res

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In this article, we analyse the optimal investment decision in a new health care technology of a representative hospital that maximises its surplus in an uncertain environment. The new technology allows the hospital to increase the quality level of the care provided, but the investment is irreversible. The article uses the framework of the real option literature to show how the purchasing rules might influence the level of investment. We show that the investment in new technology is best incentivate within a long term contract where the number of treatments reimbursed depends on the level of investment made in the period when the technology is new. In this way, asymmetry of information does not affect the outcome of the contract. In our model in fact the purchaser can verify the level of the investment only at the end of each period but the purchasing rule has an anticipating effect on the decision to invest. Terms of use: Documents in

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“…The following result is well known (e.g., Laffont and Martimort , 164).Observation If both performance measures perfectly represent the transaction ( θ = 0), the solution is to make a single bonus payment of ( a H − a L )/( p HH − q HH ) for the report ( r H ,r H ) with the highest associated likelihood ratio p HH /q HH . All other payments are zero.…”

Section: Imperfect Measurement Quality Vs Information Asymmetries Abmentioning

confidence: 93%

Information Asymmetries about Measurement Quality

Glover

Levine

2019

Contemporary Accting Res

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This article studies contracts between a principal and an agent that are robust to information asymmetries about measurement quality. Our main result is that an information asymmetry about measurement quality not only reduces the usefulness of a given performance measure for stewardship purposes, it also qualitatively changes the way the performance measure is used if the information asymmetry is sufficiently large. We also study the manipulability of performance measures, assuming that poor measurement quality creates room for manipulation via selective (cherry-picked) corrections by the agent. With known imperfect measurement quality, manipulability lowers the cost of providing incentives. Manipulability introduces overstatements only, while imperfect measurement introduces both overstatements and understatements. However, with an information asymmetry about measurement quality, manipulability can increase the cost of providing incentives, since there is now an induced information asymmetry about manipulability.Asymétrie de l'information relative à la qualité des critères d'évaluation RÉSUMÉLes auteurs étudient des contrats mandant-mandataire suffisamment solides pour résister aux asymétries de l'information relative à la qualité des critères d'évaluation. Selon leur principal constat, l'asymétrie de l'information quant à la qualité des critères d'évaluation a pour conséquence non seulement de réduire l'utilité d'un critère donné d'évaluation de la performance à des fins de gérance, mais aussi de modifier l'aspect qualitatif de son utilisation lorsque l'asymétrie de l'information est suffisamment importante. Les auteurs analysent également la mesure dans laquelle les critères d'évaluation de la performance peuvent être manipulés, en s'appuyant sur l'hypothèse selon laquelle la piètre qualité des critères d'évaluation les expose à être manipulés par le mandataire au moyen de corrections sélectives. Dans le cas de critères d'évaluation connus mais imparfaits, la possibilité de manipuler les critères réduit les coûts associés à l'instauration de mesures incitatives. Des critères d'évaluation de la performance exposés à la manipulation entraînent uniquement des surestimations, alors que des critères d'évaluation imparfaits entraînent à la fois des surestimations et des sous-estimations. Cependant, en situation d'asymétrie de l'information relative à la qualité des critères d'évaluation, des critères d'évaluation de la performance qui se prêtent à la manipulation risquent d'accroître les coûts associés à l'instauration de

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The Theory of Incentives

Cited by 1,399 publications

References 0 publications

Optimal compensation rule under provider adverse selection and moral hazard

Optimal compensation rule under provider adverse selection and moral hazard

Investment in Hospital Care Technology Under Different Purchasing Rules: A Real Option Approach

Information Asymmetries about Measurement Quality

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