The use of current performance as a partial basis for setting future targets is an almost universal feature of economic planning. This "ratchet principle," as it is sometimes called, creates a dynamic incentive problem for the enterprise. Higher rewards from better current performance must be...

The basic point of this article is that a "crash program" mentality leads to inappropriate questions and wrong answers about policy issues in large-scale government subsidized research, like the development of synfuels. R&D funding should be viewed as a sequential decision, not a...

Using a simple formal model, the present paper analyzes under what conditions the price system or crude rationing is more effective in matching up the limited supply of a deficit commodity with those users who need it most. The answer depends in a well-defined way on the distribution of needs...

Suppose y is a "performance indicator" for an enterprise. As examples, y might stand for output, profits, cost savings, or factor productivity. With standard piecework reward systems the manager of an enterprise will try to convince his superiors that y is likely to be small, thereby entitling...