Title: Why Incentive Fails: Theory,Practice and Implication
Abstract:Incentive mechanism can decrease or eliminate efficiency loss brought by resource allocation under asymmetric information. However, it always fails in reality. To explain this, the paper reviews the i...Incentive mechanism can decrease or eliminate efficiency loss brought by resource allocation under asymmetric information. However, it always fails in reality. To explain this, the paper reviews the incentive theory from the whole framework, investigates the interface between theory and practice, and analyzes the deviance mathematically. At last, the paper considers that the design of incentive mechanism is the choice under constraints, and analyzes the paradox and clash of different incentive methods in practice. There are two ways to solve this problem: one is to combine and coordinate different incentive methods; the other is to use incentive and monitor at the same time.Read More
Publication Year: 2006
Publication Date: 2006-01-01
Language: en
Type: article
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