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Questions tagged [incentives]

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50 votes
8 answers
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How do economists explain why people contribute to Wikipedia?

What incentives do contributors have? I believe they earn no money. And usually, they earn no reputation either, because most of the contributions are anonymous. I believe this is a public goods game. ...
user avatar
8 votes
1 answer
87 views

Is "avoiding being the bearer of bad news" an example of the "principal-agent problem"?

For example: A king designs a bridge, and he unknowingly does a bad job. He asks an engineer for her opinion, but the engineer fears that if she tells the truth, the dictator will be angry with her. ...
wintergreen_plaza's user avatar
5 votes
3 answers
910 views

What's the difference between Ex-post Incentive Compatibility and Dominant-Strategy Incentive Compatibility

According to the Wikipedia definition of Dominant-Strategy Incentive Compatibility (DSIC): DSIC means truth-telling is a weakly-dominant strategy, i.e. you fare best or at least not worse by being ...
Francis's user avatar
  • 75
4 votes
1 answer
109 views

Design of efficient cheap talk communication

Are there any papers about efficient cheap talk communication, where the players achieve the equilibrium payoffs of a correlated strategy as in Aumann's seminal paper? Or in case no such paper exists, ...
Hunger Learn's user avatar
4 votes
1 answer
40 views

Incentive compatibilty conditions for multi-item auctions

In this paper by Myerson on optimal single item auctions, the incentive compatibility condition is shown to be equivalent to the following simpler conditions on the auction - (i) the allocation ...
Aniruddha Acharya's user avatar
2 votes
1 answer
28 views

locating specific model from organizational economics

I am trying to find one specific model from organizational economics that I encountered in one of my past classes, but I cant remember the name of the model and google scholar search based on some of ...
1muflon1's user avatar
  • 58.5k
2 votes
3 answers
100 views

What are the economics behind web spam?

In this question, I'm referring to "web spam" on search engines (not email spam), such as placing misleading keywords on one's web page so that a pornographic site, for example, would get a lot of ...
Joebevo's user avatar
  • 413
2 votes
1 answer
49 views

How can incentive compatibility be interpreted in terms of agents not wanting to imitate each other?

In my finance class, the professor seems to treat "incentive compatibility" to be equivalent to "none of the agents in the model have reason to imitate each other". Is this a ...
1989-a-number's user avatar
2 votes
1 answer
215 views

Which mathematics are required for fully understanding the theories of the firm?

When I say "theories of the firm", I'm referring, in particular, to the theories exposed in the next works: 1) Transaction Cost Economics exposed in "Transaction Cost Economics" by ...
David Fernando Jiménez's user avatar
2 votes
1 answer
53 views

What is the meaning of "labor input" in the context of incentive theories?

In the article "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design" (Holmström and Milgrom, 1991) it is said that two identical agents ($i=1,2$) devote ...
David Fernando Jiménez's user avatar
1 vote
1 answer
431 views

Strike time in a game

Suppose A forwards a puzzle to B where if B solves the puzzle within 24 hours then it gets a payoff of M (M>0), if not then it gets nothing i.e. 0. Consider A locks the money with the bank for the ...
Subhra Mazumdar's user avatar
1 vote
2 answers
112 views

Why is Dominant-Strategy Incentive Compatibility treated as a virtue, and are there mechanism design models which treat it as undesirable?

Why is Dominant-Strategy Incentive Compatibility treated as such a ubiquitous virtue? In this lecture, the answer given from the perspective of a non-principal player is, "it's easy to play; you ...
user10478's user avatar
  • 455
1 vote
1 answer
325 views

What is a super deduction?

This is a term often encountered in documents published by the Big Four (Deloitte, Ernst & Young, Price Waterhouse Coopers, KPMG), for instance in the E&Y 2018 Worldwide R&D Incentives ...
David Cian's user avatar
1 vote
0 answers
21 views

Is there a standard term for this tradeoff when subsidizing: inducing dependence vs providing support?

I've often heard it informally argued "people will become lazy if you give them handouts". Although I doubt the economic sophistication of most such assertions, I do think they have a real point: you ...
BoxBaron's user avatar
1 vote
0 answers
42 views

Has contest theory ever been used to design real-world contests?

Contest theory, very much like auction theory, studies how people act in a contest and the properties of such a competition. There is a large literature that investigates different aspects of the ...
mrb's user avatar
  • 163
0 votes
1 answer
49 views

Does Dominant Strategy Incentive Compatibility apply to this modification of Rock Paper Scissors?

I understand the notion of Dominant Strategy Incentive Compatibility in auctions. I am wondering whether this concept can be extended to all games. For example, the game "Rock Paper Scissors&...
user10478's user avatar
  • 455
0 votes
0 answers
29 views

Moral hazard, prosecution and fines

I wonder whether there are theoretical or empirical papers on the pros and cons of giving back part of the fines paid by someone to cover a part of the costs endured by the prosecuting body. I have in ...
Anthony Martin's user avatar
0 votes
0 answers
89 views

Incentive compatibility constraint with continuous types

I have a Principal agent problem where principal knows about the information about the agent which is critical to both the parties. Principal is a business tycoon who has an inside information about ...
Elina Gilbert's user avatar
-1 votes
2 answers
149 views

Business models based on things not happening

Could you provide examples of business models, where the service provider gets rewarded for things not happening (or at least not deteriorating). For instance, models where medics get rewarded when ...
drabsv's user avatar
  • 107