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incentives

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    Incentive Design Entry #0394

    Why a strong guarantee shifts behaviour on both sides

    A guarantee moves the cost of a bad outcome from one party to another. Both parties then face different prices for care, and both respond.

    Adept
    The hidden part #0394

    A guarantee does not remove the cost of a bad outcome. It reassigns it, and every party whose price of care changed will adjust.

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    Incentive Design Entry #0393

    The reason peer review rewards caution

    A reviewer who wrongly rejects is never identified. A reviewer who wrongly accepts is named in the record, and the two errors are not priced alike.

    Novice
    The hidden part #0393

    The two errors of review are not priced alike. A missed discovery is anonymous and a published mistake is attributable, so caution is the cheaper mistake.

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    Incentive Design Entry #0391

    The reason a subsidy raises the price of the subsidised

    Who receives a payment and who keeps it are separate questions. Where supply cannot expand, the payment is absorbed into the price instead.

    Adept
    The hidden part #0391

    A subsidy is paid to whoever is named and kept by whoever holds the scarce side. Where supply cannot move, the price does.

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    Incentive Design Entry #1115

    Why audits can change before they happen

    Audit incentive effect shifts behaviour before any audit occurs, because the anticipated inspection changes what people choose to hide or report.

    Master
    The hidden part #1115

    The strongest audit is often the one that has not yet arrived but has already changed the records.

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