(Wednesday, 23rd May 2007)
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The objective of this workshop is to take stock of advances in economics and psychology when designing incentive contracts. Recent literature has highlighted a well-known psychological phenomenon: monetary incentives may crowd out voluntary contributions. We will focus on a slightly different issue, that of a principal facing an agent with intrinsic motivation or altruism. We will in particular discuss how incentive contracts should be modified to take these sources of motivation into account, in the presence of moral hazard.
Bibliographical references :
Must read reference : Benabou, Roland, and Jean Tirole (2003) “Intrinsic and Extrinsic Motivation”, Review of Economic Studies, 70 (3): 489-520.
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Benabou, Roland, and Jean Tirole, “Incentives and Prosocial Behavior”, forthcoming in American Economic Review.
Fehr, Ernst, and Armin Falk (2002) “Psychological foundations of incentives”, European Economic Review, 46 (4-5): 687-724.
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Rowat, Colin, and Paul Seabright (2006) “Intermediation by Aid Agencies”, Journal of Development Economics, 79 (2): 469-491.
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