A note on incentive incompatibility under franchising

1994 ◽  
Vol 9 (3) ◽  
pp. 323-330 ◽  
Author(s):  
Roger D. Blair ◽  
David L. Kaserman
Keyword(s):  
Incentive Incompatibility

scholarly journals When neither team wants to win: A flaw of recent UEFA qualification rules

2020 ◽  
Vol 15 (4) ◽  
pp. 526-532 ◽  
Author(s):  
László Csató
Keyword(s):  
Dominant Strategy ◽  
Football Match ◽  
Strategy Proof ◽  
Incentive Incompatibility ◽  
Dropping Points

Tanking, the act of deliberately dropping points or losing a game in order to gain some other advantage, is usually seen as being against the spirit of sports. It can be even more serious if playing a draw is a (weakly) dominant strategy for both teams in a match, since this may lead to collusion. We show that such a situation occurred in a particular football match. As our generalisation reveals, the root of the problem resides in the incentive incompatibility of certain UEFA qualification rules. The governing bodies of major sports should choose strategy-proof tournament designs because of several reasons. First, they may lead to the elimination of a third, innocent team. Second, incentive incompatible rules may discourage both teams from scoring goals, and the players could be interested in improving other match statistics than the number of goals.

scholarly journals FDICIA After Five Years

1997 ◽  
Vol 11 (3) ◽  
pp. 139-158 ◽  
Author(s):  
George J Benston ◽  
George G Kaufman
Keyword(s):  
Moral Hazard ◽  
Federal Government ◽  
Deposit Insurance ◽  
Market Discipline ◽  
Agent Behavior ◽  
Depository Institutions ◽  
Incentive Compatible ◽  
Insurance Reform ◽  
Early Results ◽  
Incentive Incompatibility

At year-end 1991, Congress enacted fundamental deposit insurance reform for banks and thrifts--the FDIC Improvement Act. This reform followed the failure of more than 2,000 depository institutions in the 1980s. Many failed because the incentive incompatibility of the structure of federal government-provided deposit insurance encouraged moral hazard behavior by banks and poor agent behavior by regulators. Insurance was put on a more incentive compatible basis, providing for a graduated series of sanctions mimicking market discipline that first may and then must be applied by the regulators on floundering banks. This article reviews these changes and evaluates early results.

Optimal repair of degrading computers under asymmetric information and incentive incompatibility

1998 ◽  
Vol 25 (9) ◽  
pp. 719-728 ◽  
Author(s):  
Hsing K. Cheng ◽  
Marshall Freimer ◽  
William B. Richmond ◽  
Ushio Sumita
Keyword(s):  
Asymmetric Information ◽  
Incentive Incompatibility

scholarly journals INCENTIVE MECHANISM FOR PERFORMANCE-BASED PAYMENT OF INFRASTRUCTURE PPP PROJECTS: COUPLING OF REPUTATION AND RATCHET EFFECTS

2022 ◽  
Vol 0 (0) ◽  
pp. 1-21
Author(s):  
Huimin Li ◽  
Limin Su ◽  
Jian Zuo ◽  
Xianbo Zhao ◽  
Ruidong Chang ◽  
...  
Keyword(s):  
Bargaining Power ◽  
Incentive Mechanism ◽  
Incentive Contracts ◽  
Improve Performance ◽  
Ratchet Effect ◽  
Performance Targets ◽  
Assessment Period ◽  
The Government ◽  
Incentive Incompatibility ◽  
Ratchet Effects

The performance-based payment PPP model has been widely used in the infrastructure projects. However, the ratchet effect derived from performance-based reputation incentives has been largely overlooked. To overcome this shortcoming, ratchet effect is considered in the performance-based payment incentive process. A multi-period dynamic incentive mechanism is developed by coupling the reputation and ratchet effect. The main results show that: (1) Under the coupling of reputation and ratchet effects, the optimal incentive coefficient in the last performance assessment period is always greater than that of the first period. The bargaining power can replace part of the incentive effect; (2) Due to the ratchet effect, if the government improve performance targets through performance adjustment coefficients, it needs to increase incentives to overcome the decreasing effort of the private sector; (3) When the bargaining power and punishment coefficient are small, the reputation incentive is replacing the explicit incentive. The increasing incentive coefficient would make the ratchet effect dominant the reputation effect; (4) To prevent the incentive incompatibility derived from the ratchet effect, the government should increase the incentive while increasing the punishment to achieve the “penalties and rewards”. This study provides theoretical and methodological guidance to design incentive contracts for infrastructure PPP projects.

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