Incentives: Motivation and the Economics of Information, 2nd Edition

This book, first published in 2006, examines the incentives at work in a wide range of institutions to see how and how well coordination is achieved by informing and motivating individual decision makers. The book examines the performance of agents hired to carry out specific tasks, from taxi drivers to CEOs. It investigates the performance of institutions, from voting schemes to kidney transplants, to see if they enhance general well being. The book examines a broad range of market transactions, from auctions to labor markets, to the entire economy. The analysis is conducted using specific worked examples, lucid general theory, and illustrations drawn from news stories. Of the seventy different topics and sections, only twelve require a knowledge of calculus. The second edition offers new chapters on auctions, matching and assignment problems, and corporate governance. Boxed examples are used to highlight points of theory and are separated from the main text. This book examines the incentives at work in a wide range of institutions to see how and how well coordination is achieved by informing and motivating individual decision makers. The book examines the performance of agents hired to carry out specific tasks, from taxi drivers to CEOs. It investigates the performance of institutions, from voting schemes to kidney transplants, to see if they enhance general well being. The book examines a broad range of market transactions, from auctions to labour markets, to the entire economy. This book examines the incentives at work in a wide range of institutions to see how and how well coordination is achieved by informing and motivating individual decision makers. The book examines the performance of agents hired to carry out specific tasks, from taxi drivers to CEOs. It investigates the performance of institutions, from voting schemes to kidney transplants, to see if they enhance general well being. The book examines a broad range of market transactions, from auctions to labor markets, to the entire economy. The analysis is conducted using specific worked examples, lucid general theory, and illustrations drawn from news stories. Of the seventy different topics and sections, only twelve require a knowledge of calculus. The second edition offers new chapters on auctions, matching and assignment problems, and corporate governance. Boxed examples are used to highlight points of theory and are separated from the main text A successful organization must coordinate the activities of its constituent parts. Effective coordination is problematic when the components of the organization are managed by individuals whose primary concern is personal gain, not the success of the institution. However, if everyone is motivated by narrow self-interest, the pursuit of self-interest will be self-defeating unless individual decisions are made under incentives that foster the organization's goals. This book studies incentive environments, and evaluates the resulting performance of a wide range of institutions. It also investigates the extent to which performance can be improved by modifying the incentives. Professor Campbell's treatment of the economics of information, mechanism design, and game theory from the standpoint of incentives can be followed by anyone with a basic knowledge of single-variable calculus and intermediate microeconomic theory. Readers learn the principles by working through examples, and not by digesting proofs of general theorems. Upper-level undergraduates and master's-level students will find the material particularly useful, as will Ph.D. students seeking a better grasp of theoretical principles through worked examples. "This book examines the incentives at work in a wide range of institutions to see how and how well coordination is achieved by informing and motivating individual decision makers. The book examines the performance of agents hired to carry out specific tasks, from taxi drivers to CEOs. It investigates the performance of institutions, from voting schemes to kidney transplants, to see if they enhance general well being. The book examines a broad range of market transactions, from auctions to labor markets, to the entire economy. The analysis is conducted using specific worked examples, lucid general theory, and illustrations drawn from news stories. Of the seventy different topics and sections, only twelve require a knowledge of calculus. The second edition offers new chapters on auctions, matching and assignment problems, and corporate governance. Boxed examples are used to highlight points of theory and are separated from the main text." -- Publisher description Title......Page 4 Contents......Page 8 Preface to the Second Edition......Page 12 1 Equilibrium, Efficiency, and Asymmetric Information......Page 14 2 Basic Models and Tools......Page 84 3 Hidden Action......Page 149 4 Corporate Governance......Page 209 5 Hidden Characteristics......Page 269 6 Auctions......Page 338 7 Voting and Preference Revelation......Page 397 8 Public Goods and Preference Revelation......Page 433 9 Matching......Page 480 10 General Competitive Equilibrium......Page 526 References......Page 574 Author Index......Page 592 Subject Index......Page 596