Optimal contracting with endogenous project mission

Arbeitspapier

I present a model in which a principal selects one among many agents to develop a project and influences the agent's ex post level of effort not by outcome-contingent rewards, but by the choice of the project's mission. The closer the project's mission to the agent's preferred mission, the higher the agent's intrinsic benefit from exerting effort. The principal and the agents disagree on what the project's mission should be and the agents vary in how much they care about the project's mission, i.e. they have heterogeneous unobservable intrinsic motivation levels. I derive the optimal mechanism (allocation rule, project's mission, payment) to select and motivate the agent. I also consider situations where the project's mission must be chosen prior to the allocation of the project and where the agents face budget constraints. Several applications are discussed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 150

Classification and Topics

• Classification: Wirtschaft ; Public Goods ; Altruism; Philanthropy; Intergenerational Transfers ; Asymmetric and Private Information; Mechanism Design
• Subject: optimal contracting ; non-monetary incentives ; mission preferences ; intrinsic motivation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cassar, Lea
• Event: Veröffentlichung
• (who): University of Zurich, Department of Economics
• (where): Zurich
• (when): 2014

Further information

• DOI: doi:10.5167/uzh-94282
• Handle: http://hdl.handle.net/10419/111215
• Last update: 10.03.2025, 11:45 AM CET