Different Kinds Of Incentives Research Articles

Snap Judgements and Availability Bias in Travel Decisions

Past research has explored how travelers make economic decisions, but only a small number of papers look at financial nudges and price anchoring—how they might cause travelers to make snap judgements about value that undermine rational economic principles. This research explores the behavioral response to different kinds of incentives. It finds that, consistent with theory, when presented with two numbers certain individuals will anchor to a higher number and be willing to pay more. Likewise, it finds that certain consumers are not able to quickly make judgements about the cost of travel. When the survey participants were offered daily or monthly payment plans, payments each day were valued almost twice as much as a single payment each month. This offers important policy considerations for public agencies seeking to reduce driving, particularly as new disruptive platforms emerge and new technology allows for more dynamic and curated data to be used to nudge travel behavior.

The Pervasive Problem of Special Economic Zones for International Economic Law: Tax, Investment, and Trade Issues

AbstractSpecial Economic Zones (SEZs) have been a huge success and brought a great number of benefits to the whole world. With different kinds of incentives, SEZs have created favorable conditions in order to attract foreign investors. In this article, several specific issues are considered. First, whether SEZs are legal under international economic law (IEL). Second, what kind of specific issues they raise under IEL. Thirdly, what measures governments can take in order not to be challenged. The first section illustrates the definition of SEZs and their rapid development; the second section will consider the interaction between SEZs and international tax law, especially the base erosion and profit shifting (BEPS) Action 5; the third section focuses on the relationship between SEZs and investment agreements and the disputes raised as a consequence; the fourth section will talk about SEZs and the World Trade Organization (WTO), as some incentives used by SEZs may not be compatible with WTO regulations. The article shows that SEZs can be harmful. For one thing, tax incentives applied in SEZs may lead to tax evasion, and the competitive circumstances between states may be changed. For another thing, the frequent changes of policies in SEZs may result in indirect expropriation, and investor-state arbitration under investment treaties can be used by foreign investors to protect their SEZ-related benefits. In addition, although WTO rules do not explicitly regulate SEZs, a number of measures, such as subsidies, do fall under the ambit of WTO rules, and these measures cannot be discriminatory.

The Influence of Different Kinds of Incentives on Decision-Making and Cognitive Control in Adolescent Development: A Review of Behavioral and Neuroscientific Studies.

A number of recent hypothetical models on adolescent development take a dual-systems perspective and propose an imbalance in the maturation of neural systems underlying reward-driven and control-related behavior. In particular, such models suggest that the relative dominance of the early emerging subcortical reward system over the later emerging prefrontal-guided control system leads to higher risk-taking and sensation-seeking behavior in mid-adolescents. Here, we will review recent empirical evidence from behavioral and neuroscientific studies examining interactions between these systems and showing that empirical evidence in support for the view of a higher sensitivity to rewards in mid-adolescents is rather mixed. One possible explanation for this may be the use of different kinds and amounts of incentives across studies. We will therefore include developmental studies comparing the differential influence of primary and secondary incentives, as well as those investigating within the class of secondary incentives the effects of monetary, cognitive, or social incentives. We hypothesized that the value of receiving sweets or sours, winning or losing small or large amounts of money, and being accepted or rejected from a peer group may also changes across development, and thereby might modulate age differences in decision-making and cognitive control. Our review revealed that although developmental studies directly comparing different kinds of incentives are rather scarce, results of various studies rather consistently showed only minor age differences in the impact of incentives on the behavioral level. In tendency, adolescents were more sensitive to higher amounts of incentives and larger uncertainty of receiving them, as well as to social incentives such as the presence of peers observing them. Electrophysiological studies showed that processing efficiency was enhanced during anticipation of incentives and receiving them, irrespective of incentive type. Again, we found no strong evidence for interactions with age across studies. Finally, functional brain imaging studies revealed evidence for overlapping brain regions activated during processing of primary and secondary incentives, as well as social and non-social incentives. Adolescents recruited similar reward-related and control-related brain regions as adults did, but to a different degree. Implications for future research will be discussed.

The Optimal Contract under Adverse Selection in a Moral-Hazard Model with a Risk-Averse Agent

This paper studies the optimal contract offered by a risk-neutral principal to a risk-averse agent when the agent’s hidden ability and action both improve the probability of the project being successful. We show that if the agent is sufficiently prudent and able, the principal induces a higher probability of success than under moral hazard, despite the costly informational rent given up. Moreover, there is distortion at the top. Finally, the conditions to avoid pooling are difficult to satisfy because of the different kinds of incentives to be managed and the overall trade-off between rent extraction, insurance, and efficiency involved.

FORMS OF FINANCIAL INTERACTION OF THE STATE AND BUSINESS IN INFRASTRUCTURE PROJECTS

In Ukraine, as in other developed countries, transportation is one of the basic sectors of economy and the most important component of industrial infrastructure. Sustainable development of transportation system is a guarantee of the unity of economic space, free movement of goods and services, competition and freedom of economic activity, ensuring the integrity of Ukraine and its national security, improvement of the quality of life of citizens. Studies of the aspects of the formation and implementation of public-private partnerships (PPP) in various sectors of the economy were a part of the research of scholars, such as V. Varnavskyy, V. Geyets, I. Zapatrina, P. Zakharchenko, Y. Zvorykina, V. Kondratiev, T. Lebeda, A. Sosnovskyy, O. Pyltyay and others. The aim of the article is to study the forms of financial cooperation between the state and business in the development of transport infrastructure. Progressive experience shows that implementation of different models of public-private partnership in transport sector, especially in the construction of highways, is gaining significant momentum. From various tools of PPP projects in transport sector the most common are PPP – institutional alternatives that represent specific options of responsibilities distribution between public and private partners and the ability to use different kinds of incentives. The most common PPP models for transport sector include: concession agreements; operator (service) state contract; life cycle contract; lease with investment obligations. The main sources of funding for PPP in road construction projects include: budgets of different levels, private sector funds, resources of financial institutions, funds of international financial institutions and private investors, funds of institutional investors. One of contemporary forms of PPP is infrastructure financing through the issuance of infrastructure bonds. The ability to raise funds of a large number of investors for a relatively low cost makes infrastructure bonds one of the most promising forms of funding for transport infrastructure. The development of public-private partnership in Ukraine, given the limited financial state resources, has to become a factor of economic growth and development of infrastructure sectors

Contracting in Medical Equipment Maintenance Services: An Empirical Investigation

Equipment manufacturers offer different types of maintenance service plans (MSPs) that delineate payment structures between equipment operators and maintenance service providers. These MSPs allocate risks differently and thus induce different kinds of incentives. A fundamental question, therefore, is how such structures impact service performance and the service chain value. We answer empirically this question. Our study is based on a unique panel data covering the sales and service records of over 700 diagnostic medical body scanners. By exploiting the presence of a standard warranty period, we overcome the key challenge of isolating the incentive effects of MSPs on service performance from the confounding effects of adverse selection. We found that moving an operator from a basic pay-per-service plan to a fixed-fee full-protection plan leads to both a reduction in reliability and an increase in service costs. We further show that the increase in cost is driven by both the operator and the service provider. Our results point to the presence of losses in service chain value in the maintenance of medical equipment, and provide the first evidence that a basic pay-per-service plan, where the risk of equipment failure is borne by the operator, can actually improve performance and costs.

Incentives' Effect in Influenza Vaccination Policy

In the majority of developed countries, the level of influenza vaccination coverage in all age groups is suboptimal. Hence, the authorities offer different kinds of incentives for people to become vaccinated such as subsidizing immunization or placing immunization centers in malls to make the process more accessible. We built a theoretical epidemiological game model to find the optimal incentive for vaccination and the corresponding expected level of vaccination coverage. The model was supported by survey data from questionnaires about people's perceptions about influenza and the vaccination against it. Results suggest that the optimal magnitude of the incentives should be greater when less contagious seasonal strains of influenza are involved and greater for the nonelderly population rather than the elderly, and should rise as high as $57 per vaccinated individual so that all children between the ages of six months and four years will be vaccinated. This paper was accepted by Yossi Aviv, operations management.

Patent law and innovation (Nanjing, December 2–4 2012)

On December 2-4, 2012 the Sino-German Institute for Legal Studies and the Konrad-Adenauer- Foundation Shanghai jointly held an international symposium on “Patent Law and Innovation”. The symposium follows a long term tradition of bringing together academics, practitioners and politicians to discuss current issues that have a high impact on society. One such issue is patent law: The government of the People’s Republic of China (“China”) seeks to gradually change its production dominated industry into one driven by innovation. Goods shall not only be made, but also be created in China. Therefore the Chinese government has designed different kinds of incentives to promote research and development: local governments could receive a bonus for the number of patents granted in their territory, corporate income tax could be reduced quite significantly when filing many patents, professors who acquire patents are more likely to win tenure, workers and students enhance their chances to earn a hukou . In conjunction with a low patent fee these measures have created an atmosphere that has actively encouraged patent application, which has in turn led to a sevenfold growth in patent filings at China`s State Intellectual Property Office (SIPO) during the last decade. [...]

The effects of extrinsic incentives on respondent behaviour in contingent valuation studies

In contingent valuation studies to assess the economic value of environmental goods, respondents are often given small presents or money amounts at the beginning of the interview to compensate them for their time spent on the survey and to encourage them to be conscientious when answering the questions. Yet, it is still an open question whether this practice biases contingent valuation survey responses, especially stated willingness to pay (WTP) for the respective environmental good. This study employs a set of field experiments to investigate the effect of respondent incentives in the form of monetary and in-kind gifts on responses in a contingent valuation survey. It is analysed how these different kinds of incentives affect (1) respondents’ diligence when answering contingent valuation method questions, (2) the likelihood of a respondent to state a positive WTP and (3) the amount of stated WTP. Results show that with respect to raising respondents' diligence in the survey interview, a moderate monetary incentive is most effective. The results regarding the effect on WTP statements are less clear. While the likelihood to state a positive WTP is increased by most incentives, mean WTP estimates are virtually unaffected.

Incentives' Effect in Influenza Vaccination

In the majority of developed countries, the level of influenza vaccination coverage in all age groups is sub-optimal. Hence, the authorities offer different kinds of incentives for people to become inoculated such as subsidizing immunization or placing immunization centers in malls to make the process more accessible. We built a theoretical epidemiological game model to find the optimal incentive for inoculation and the corresponding expected level of vaccination coverage. The model was supported by survey data from questionnaires about people's perceptions about influenza and the vaccination against it. Results suggest that the optimal magnitude of the incentives should be greater when less contagious seasonal strains of influenza are involved, greater for the non-elderly population rather than the elderly, and should rise as high as $60 per inoculated individual so that all children between the ages of six months and four years will be inoculated.

Economic incentives as a policy tool to promote safety and health at work

Incentives are regarded as a promising policy tool for promoting occupational safety and health (OSH). This article discusses the potential of different kinds of incentives in light of economic theory and evidence from research. When incentives are used as a policy tool, it implies the existance of an institution that has both the interest and the power to apply incentives to stakeholders, usually to employers. Governments can subsidize employers' investments in OSH with subsidies and tax structures. These incentives are successful only if the demand for OSH responds to the change in the price of OSH investments and if the suppliers of OSH are able to increase their production smoothly. Otherwise, the subsidy will only lead to higher prices for OSH goods. Both public and private insurance companies can differentiate insurance premiums according to claim behavior in the past (experience rating). There is evidence that this can effectively lower the frequency of claims, but not the severity of cases. This papers concludes that incentives do not directly lead to improvement. When incentives are introduced, their objective(s) should be clear and the end result (ie what the incentive aims to promote) should be known to be effective in achieving healthy and safe workplaces.

Factors influencing the transferability of occupational safety and health economic incentive schemes between different countries

This article looks at the factors that influence the transferability of different types of occupational safety and health (OSH) economic incentives from one country to another. To review the legal, political, and cultural framework conditions for economic incentive schemes in the European Union (EU), the European Agency for Safety and Health at Work (EU-OSHA) surveyed EU member states about the state of such schemes in their countries. In addition to the survey responses, relevant information on existing schemes and their national context within the 27 EU member states was gathered through reports, articles, and databases. Following this, countries were clustered according to cross-cultural differences. Despite the apparent variations in Europe's social security systems, there is a high degree of similarity between the countries regarding the basic criteria of design of the system. In addition, different kinds of incentives are used in different member states regardless of the social insurance system. When it comes to insurance incentive schemes, the fundamental difference between countries is whether the workers' compensation scheme is based on a competitive market between private insurance companies or a kind of monopoly structure, where the employers do not have the choice between several insurance companies. A clear majority of 19 of the 27 EU member states have a monopoly system. Subsidy systems, tax incentives, and insurance-based "experience rating" are theoretically -possible in all EU countries. In competitive insurance markets, effort-based incentives are more difficult to achieve. A possible solution could be the introduction of long-term contracts or the creation of a common prevention fund, financed equally by all insurers.

The influence of coordination mechanisms on new product development in MNC subsidiaries

This paper investigates the relationship between [MNC] coordination mechanisms and subsidiary new product development [NPD] activities. We focus on two essentially different coordination mechanisms, internal markets and global decision-making autonomy, and argue that both mechanisms are likely to increase a subsidiary's exposure to market forces which, in turn, provides different kinds of incentives for a subsidiary's in-house NPD and NPD outsourcing. We tested our hypotheses using structural equations modeling. The results suggest that internal markets have a positive effect on NPD outsourcing while global autonomy has a positive effect on inhouse NPD. Thus, this study contributes to integrating the internal market construct with the coordination mechanism stream of literature.

Blood donor incentives: A step forward or backward

Dramatic increase in blood usage and critical seasonal blood shortages are faced by various countries. Countries which previously reached 100% voluntary nonremunerated donation have been led to offer different kinds of incentives to recruit blood donors and meet their blood demands. In some cases, these incentives are considered monetary and are in complete contrast with International standards like World Health Organization (WHO). It seems that attitudes toward sole dependency on nonremunerated voluntary blood donation have been changed in recent years and experts in some developed countries are reevaluating partial reliance on paid donation. On the other hand, besides the effects of such incentives on blood safety, several economic and psychological studies have shown that incentives have discouraging effects on pro-social behaviors like blood donation and will reduce the number of blood donors in long term. With regard to the results of such studies, it seems that implementing incentive-based blood donor recruitment programs to meet blood requirements by some countries is becoming a challenge for blood banks.

Customary Tenure and Reciprocal Grazing Arrangements in Eastern Ethiopia

ABSTRACTThis article examines how customary tenure provides a basis for reciprocal access arrangements and facilitates access to grazing resources in order to adapt to changing conditions. A critical review of the literature on the range ecology and institutions of resource governance guides the overall analysis, while empirical results from three case studies show that internal social relationships and kinship structures still remain important determining factors in facilitating access to the grazing commons. Many forms of institutional arrangements exist, providing different kinds of incentives. For instance, trading of grazing rights at household level provides an important safety‐net for poor pastoral and agropastoral herders, in spite of fears regarding negative externalities for de facto co‐owners of the commons. Evidence from the three studied districts reveals that the influence of resource attributes on institutional choice favours flexibility rather than supporting the axiom of the conventional property rights theory, which considers greater exclusivity to be a natural response to scarcity. Institutions supporting reciprocal grazing relations are characterized by negotiability and by an ambiguity of rights: clan rules facilitating reciprocal grazing are not based on maximization of benefits from own grazing commons, but rather on maximization of security of use rights through investing in relations with others.

Solving coordination failure with “all-or-none” group-level incentives

Coordinating activity among members is an important problem faced by organizations. When firms, or units within firms, are stuck in bad equilibria, managers may turn to the temporary use of simple incentives—flat punishments or rewards—in an attempt to transition the firm or unit to a more efficient equilibrium. We investigate the use of incentives in the context of the “minimum-effort,” or “weak-link,” coordination game. We allow groups to reach the inefficient equilibrium and then implement temporary, flat, “all-or-none” incentives to encourage coordination on more efficient equilibria. We vary whether incentives are positive (rewards) or negative (penalties), whether they have substantial or nominal monetary value, and whether they are targeted to a specific outcome (the efficient equilibrium) or untargeted (apply to more than one outcome). Overall, incentives of all kinds are effective at improving coordination while they are in place, but there is little long-term persistent benefit of incentives—once incentives are removed, groups tend to return to the inefficient outcome. We find some differences between different kinds of incentives. Finally, we contrast our results to other recent work demonstrating greater long-term effectiveness of temporary incentives.

Reducing the Incentives to Proliferation

There are two very different kinds of incentives to nuclear proliferation. We are used to seeing nations deter potential enemies and win political concessions with such weapons. A newer, very different, kind of incentive stems from the economic overlap between peaceful electric power reactors and the production of weapons-grade plutonium or enriched uranium; there may now be an economic cost to steering away from the bomb, rather than a cost to making it. Reducing the political-military incentives to proliferation will require a case-by-case approach. Some of these incen tives can be decreased by extending the American nuclear umbrella, as for Europe and Japan. But a serious problem can then emerge in preventing proliferation by such "outlaw states" as South Africa, Israel, and Taiwan. For much of the world, moreover, the bomb will be more of a political- prestige item than a military tool, so that a superpower nuclear umbrella would be redundant or counter-productive. Reducing the economic incentives will also require a case-by- case approach. This cannot be achieved by simply cutting off technological assistance in the nuclear field. Rather, it must be done by using such assistance as a subtle "carrot" or "stick," to persuade the leaders of countries like Brazil and Japan to stay away from bombs.