Incentivizing research with (un)conditional teaching duties: Punishment or rent extraction?

Patrick Schmitz

Economics Letters, 2023, vol. 224, issue C

Abstract: A principal wants an agent to exert unobservable research effort. Ruling out negative payments implies that (i) the principal cannot punish bad outcomes and (ii) she cannot extract rents. We disentangle these two effects by allowing the principal to place verifiable teaching duties on the agent. In the first scenario, the principal can punish the agent with completely unproductive teaching duties conditional on bad research outcomes. In the second scenario, the agent is forced to teach regardless of research outcomes, though his teaching disutility is larger than the principal’s benefit. Each of the two scenarios may involve higher research efforts.

Keywords: Moral hazard; Limited liability; Hidden action; Incentive contracts; Job design (search for similar items in EconPapers)
JEL-codes: D86 I23 J41 M52 O32 (search for similar items in EconPapers)
Date: 2023
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Related works:
Working Paper: Incentivizing Research with (Un)conditional Teaching Duties: Punishment or Rent Extraction? (2023)
Working Paper: Incentivizing Research with (Un)conditional Teaching Duties: Punishment or Rent Extraction? (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:224:y:2023:i:c:s016517652300037x

DOI: 10.1016/j.econlet.2023.111012

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