Incentives for motivated agents under an administrative constraint

Miltiadis Makris

Journal of Economic Behavior & Organization, 2009, vol. 71, issue 2, pages 428-440

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.

Keywords: Mission-orientated; organisations; Asymmetric; information; Administrative; constraint (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:jeborg:v:71:y:2009:i:2:p:428-440

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