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Power of incentives with motivated agents in public organizations

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chaireS_6.PDF (562.7Kb)
Date
2011
Notes
Paru dans les Cahiers de la Chaire Santé, n°6, juin 2010
Dewey
Microéconomie
Sujet
regulation; power of incentive schemes; altruism; public organization; countervailing incentives
JEL code
L3; D8; D2
Journal issue
Journal of Public Economic Theory
Volume
13
Number
3
Publication date
2011
Article pages
391-416
Publisher
Wiley
DOI
http://dx.doi.org/10.1111/j.1467-9779.2011.01505.x
URI
https://basepub.dauphine.fr/handle/123456789/5991
Collections
  • LEDa : Publications
Metadata
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Author
Naegelen, Florence
Mougeot, Michel
Type
Article accepté pour publication ou publié
Abstract (EN)
Public service motivation is often considered as an argument for low- powered incentive schemes in the public sector. In this paper, we characterize the optimal contract between a public regulator and an altruistic agent according to the degree of public service motivation, when the type of the public service consumer is privately observed. We show that the requested effort is non decreasing with and can be higher than the first best level. Moreover we show that the agent is put on a high powered contract when some customers are served but that this contract is associated with different types of consumers according to : In contrast, the agent is never put on a cost-plus contract. Finally, we show that the first best allocation can be achieved under budget balance for a degree of altruism higher than a threshold that we characterize.

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