This essay discusses an integrative economic theory that reconciles rank-order tournaments with the traditional public administration concern for accountability in government. Recent reforms have concentrated on organizational designs that flow from piece-rate approaches to employee compensation...

The canonical principal-agent problem involves a risk-neutral principal who must use incentives to motivate a risk-averse agent to take a costly, unobservable action that improves the principal's payoff. The standard solution requires an inefficient shifting of risk to the agent. This paper,...