Ethics, Organ Markets, and Dry Ice

This chapter argues that thr author's dry ice saga graphically illustrates one of the central problems in organ donation today. It examines why most medical centers make it harder than is needed for people to donate organs. Advocates for markets in organs talk about the power of incentives, however, what we see today, is the power of disincentives. The chapter offers a better model to treat organ donors: to treat them like financial donors. Philanthropy professionals in medical centers around the country are expert at taking care of donors, making it easy for them to give, cultivating them, and showing gratitude. The chapter explores how organ donation programs could improve their customer service, and possibly retain more potential donors, if they developed the ethos of their philanthropy departments instead of the ethos of their surgery departments. The chapter also explains the logic of supply and demand in relation to the barriers of cost and inconvenience for people who are willing to donate. Ultimately, it presents the arguments of the opponents and the defenders of markets about the idea of legalized organ markets.

Performance pay and enterprise productivity: the details matter

Purpose The purpose of this paper is to provide novel and rigorous evidence on the productivity effect of varying attributes of performance-related pay (PRP) and shows that the details of PRP indeed matter. Design/methodology/approach In doing so, the authors exploit the panel nature of the Finnish Linked Employer–Employee Data on the details of PRP. Findings The authors first establish that the omitted variable bias is serious, which makes the cross-sectional estimates on the productivity effect of the details of PRP biased upward substantially. Relying on the fixed effect estimates that account for such bias, the authors find: (first, group incentive PRP is more potent in boosting enterprise productivity than individual incentive PRP; second, group incentive PRP with profitability as a performance measure is especially powerful in raising firm productivity; third, when a narrow measure (such as cost reduction) is already used, adding another narrow measure (such as quality improvement) yields no additional productivity gain; and fourth, PRP with greater power of incentives (the share of PRP in total compensation) results in greater productivity gains, and returns to power of incentives diminishes very slowly. Originality/value Much of the empirical literature on PRP focuses on a question of whether the firm can increase firm performance in general and enterprise productivity in particular by introducing PRP and if so, how much. However, not all PRP programs are created equal and PRP programs vary significantly in a variety of attributes. This paper provides novel and rigorous evidence on the productivity effect of varying attributes of PRP and shows that the details of PRP indeed matter.

Teacher Evaluation, Pay for Performance, and Learning Around Instruction: Between Dissonant Incentives and Resonant Procedures

Purpose: The study examines why the logic of a performance management system, supported by the federal Teacher Incentive Fund, might be faulty. It does this by exploring the nuances of the interplay between teaching evaluations as formative and summative, the use of procedures, tools, and artifacts obligated by the local Teacher Incentive Fund system, and bonus payments as extrinsic motivators. Research Methods: The study is a qualitative longitudinal study in three public charter schools that were selected as a presumably conducive environment for incentive-driven performance management. Eight rounds of semistructured interviews, 130 interviews, and 65 hours of meeting observations are the data for this study. Findings: In the three charter schools, the adoption period was characterized by consonance, the belief that the performance management system served valued purposes. In midlife, dissonance set in. Performance contingencies attached to both bonus and external evaluations were perceived as disconfirming the values of the schools. Incentives and status competition were largely rebuffed and relegated to the periphery. Once the power of incentives became latent, a period of resonance set in. Administrators and teachers came to interact with the two main artifacts, videos of lessons and the Summative Evaluation of Teaching observation tool, in ways that afforded new learning. Implications for Research and Practice: The study suggests that research insights can be gained when logics of complex performance management systems are disentangled and competing dynamics deliberately studied. Practically speaking, when schools try to maintain a rich collegial culture, incentives may crowd out the use of teaching evaluations for formative learning.

The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance

We explore the power of behavioral economics to influence the level of effort exerted by students in a low stakes testing environment. We find a substantial impact on test scores from incentives when the rewards are delivered immediately. There is suggestive evidence that rewards framed as losses outperform those framed as gains. Nonfinancial incentives can be considerably more cost-effective than financial incentives for younger students, but are less effective with older students. All motivating power of incentives vanishes when rewards are handed out with a delay. Our results suggest that the current set of incentives may lead to underinvestment. (JEL D03, H75, I21, I28)

Partnerships versus Corporations: Moral Hazard, Sorting, and Ownership Structure

Team production takes advantage of technological complementarities but comes with the cost of free-ridership. When workers differ in skills, the choice of sorting pattern may be associated with a nontrivial trade-off between exploiting the technological complementarities and minimizing the cost of free-ridership. This paper demonstrates that whether such a trade-off arises depends (i) on how the power of incentives required for effort provision varies with workers’ types, and (ii) on whether the workers are organized for production in partnerships or in corporations. These results have implications for how production is organized in different industries—in partnerships or in corporations. (JEL D21, D82, G32, M12, M54)

Contract Bargaining with a Risk-Averse Agent

This article is the first to study a bargaining model in a moral hazard framework where the principal is risk neutral and the agent is risk averse. We show that the power of incentives increases with the agent’s bargaining power if the contracts induce a high effort. However, under reasonable assumptions about the agent’s utility function, the contracts induce a high effort less often as the agent’s bargaining power increases. As for the social welfare, we are surprised to find that a utilitarian, who cares about the sum of the two parties’ certainty equivalents, is worse off as the agent’s bargaining power increases. These results are in sharp contrast to the literature, which features risk-neutral agents protected by limited liability.

Quantitative studies of water and sanitation utilities: a benchmarking literature survey

This paper performs a literature update of quantitative studies of water and sanitation services (WSS), with an emphasis on tracking the benchmarking literature. There are 190 studies which use cost or production functions to evaluate the performance of WSS utilities. The studies examine: (1) the scale, scope or density economies of utilities in a particular country or region; (2) the influence of ownership on efficiency; (3) the existence and power of incentives associated with different governance systems (including external regulation); and (4) performance assessment (benchmarking). In addition, this paper presents patterns regarding quantitative methods adopted over time, as well as some major trends in results.