Incentives for Motivated Agents under an Administrative Constraint

Miltiadis Makris

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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: D73; D82; H11; H41; L31; Mission-orientated Organisations; Asymmetric Information; Administrative Constraint (search for similar items in EconPapers)
Date: 2009-03-28
Note: View the original document on HAL open archive server: https://hal.science/hal-00683158v1
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Citations: View citations in EconPapers (30)

Published in Journal of Economic Behavior and Organization, 2009, 71 (2), pp.428. ⟨10.1016/j.jebo.2009.03.013⟩

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Journal Article: Incentives for motivated agents under an administrative constraint (2009)
Working Paper: Incentives for Motivated Agents under an Administrative Constraint (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00683158

DOI: 10.1016/j.jebo.2009.03.013

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