Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149268
Authors: 
Cassar, Lea
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6181
Abstract: 
I analyze a model in which a principal offers a contract to an agent and can influence the agent’s marginal return of effort by the choice of the project mission. The principal’s and the agents’ mission preferences are misaligned, and the agents have unobservable intrinsic motivation levels. I show that the non-contractibility of effort (asymmetric information) brings the mission closer to the agent’s (principal’s) preferences. Furthermore, when effort is non-contractible, the optimal mechanism i) has a “double distortion”' in the mission; ii) does not exclude low-types agents; and iii) can be implemented through a scoring auction. Several applications are discussed.
Subjects: 
optimal contracting
non-monetary incentives
mission preferences
intrinsic motivation
JEL: 
H41
D23
D82
M52
Document Type: 
Working Paper

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