Motivational Capital and Incentives in Health Care Organisations

Mikel Berdud (), Juan M. Cabasés Hita () and Jorge Nieto ()
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Juan M. Cabasés Hita: Departamento de Economía-UPNA
Jorge Nieto: Departamento de Economía-UPNA

Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra from Departamento de Economía - Universidad Pública de Navarra

Abstract: This paper explores optimal incentive schemes in public health institutions when agents (doctors) are intrinsically motivated. We develop a principal-agent dynamic model with moral hazard in which agents’ intrinsic motivation could be promoted (crowding-in) by combining monetary and non-monetary rewards. Intrinsic motivation could also be discouraged (crowding-out) when the health manager uses only monetary incentives. We discuss the conditions under which investing in doctors’ motivational capital by the use of well designed nonmonetary rewards is optimal for the health organizations manager. Our results show that such investments will be more efficient than pure monetary incentives in the long run. We will also prove that when doctors are risk-averse, it is profitable for the health manager to invest in motivational capital.

Keywords: contracts; moral hazard; intrinsic motivation; crowding effects; motivational capital (search for similar items in EconPapers)
JEL-codes: D03 D23 D86 I18 L30 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2012
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Related works:
Working Paper: Motivational Capital and Incentives in Health Care Organizations (2014)
Working Paper: Motivational Capital and Incentives in Health Care Organizations (2014)
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