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Incentivizing Research with (Un)conditional Teaching Duties: Punishment or Rent Extraction?

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  • Schmitz, Patrick W.

Abstract

A principal wants an agent to exert unobservable research effort. Ruling out negative payments implies that (i) the principal cannot punish bad outcomes and (ii) she cannot extract rents. We disentangle these two effects by allowing the principal to place verifiable teaching duties on the agent. In the first scenario, the principal can punish the agent with completely unproductive teaching duties conditional on bad research outcomes. In the second scenario, the agent is forced to teach regardless of research outcomes, though his teaching disutility is larger than the principal's benefit. Each of the two scenarios may involve higher research efforts.

Suggested Citation

  • Schmitz, Patrick W., 2023. "Incentivizing Research with (Un)conditional Teaching Duties: Punishment or Rent Extraction?," MPRA Paper 116220, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116220
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    References listed on IDEAS

    as
    1. Schmitz, Patrick W., 2013. "Public procurement in times of crisis: The bundling decision reconsidered," Economics Letters, Elsevier, vol. 121(3), pages 533-536.
    2. David Martimort & Stéphane Straub, 2016. "How To Design Infrastructure Contracts In A Warming World: A Critical Appraisal Of Public–Private Partnerships," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(1), pages 61-88, February.
    3. Jiancai Pi, 2021. "An investigation of seeming favoritism in public procurement," Manchester School, University of Manchester, vol. 89(1), pages 128-137, January.
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    6. Herbert W. Marsh & John Hattie, 2002. "The Relation between Research Productivity and Teaching Effectiveness," The Journal of Higher Education, Taylor & Francis Journals, vol. 73(5), pages 603-641, September.
    7. Müller, Daniel & Schmitz, Patrick W., 2021. "The right to quit work: An efficiency rationale for restricting the freedom of contract," Journal of Economic Behavior & Organization, Elsevier, vol. 184(C), pages 653-669.
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    9. Schmitz, Patrick W., 2013. "Job design with conflicting tasks reconsidered," European Economic Review, Elsevier, vol. 57(C), pages 108-117.
    10. Eva I. Hoppe & Patrick W. Schmitz, 2021. "How (Not) to Foster Innovations in Public Infrastructure Projects," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 238-266, January.
    11. Patrick W. Schmitz, 2005. "Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 318-336, Summer.
    12. Kräkel, Matthias, 2021. "On the delegation of authority," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 965-981.
    13. InÉs Macho‐Stadler & David Pérez‐Castrillo & Reinhilde Veugelers, 2008. "Designing Contracts for University Spin‐offs," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(1), pages 185-218, March.
    14. Patrick W Schmitz, 2022. "How (Not) to Purchase Novel Goods and Services: Specific Performance Versus at-will Contracts," The Economic Journal, Royal Economic Society, vol. 132(647), pages 2563-2577.
    15. Marco Buso & Luciano Greco, 2023. "The optimality of public–private partnerships under financial and fiscal constraints," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(4), pages 856-881, October.
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    More about this item

    Keywords

    moral hazard; limited liability; hidden action; incentive contracts; job design;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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