Setting Efficient Incentives for Agricultural Research: Lessons from Principal-Agent Theory

Wallace Huffman and Richard Just

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: A conceptual analysis of important issues in the organization and management of academic research is presented. Principal-agent theory is applied to derive optimal compensation schemes for scientists when they differ in ability, risk aversion, cost of effort, and reservation utility, and to show the optimal trade-off between institutional risk and scientists' abilities. Implications for an efficient organization of research are derived, including how scientists' incentives should be structured to elicit optimal research efforts and direction, whether research direction should be centralized or decentralized, and whether the organization of research should be through external competitive grants or program and institutional funding.

Date: 2000-11-01
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Published in American Journal of Agricultural Economics, November 2000, vol. 82, pp. 828-841

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Related works:
Journal Article: Setting Efficient Incentives for Agricultural Research: Lessons from Principal-Agent Theory (2000)
Working Paper: Setting Efficient Incentives for Agricultural Research: Lessons from Principal-Agent Theory (2000)
Working Paper: Setting Efficient Incentives for Agricultural Research: Lessons from Principal-Agent Theory (1998)
Working Paper: Setting Efficient Incentives for Agricultural Research: Lessons from Principal-Agent Theory (1998)
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