We study the relative effectiveness of contracts that are framed either in terms of bonuses or penalties. In one set of treatments subjects know at the time of effort provision whether they have achieved the bonus / avoided the penalty. In another set of treatments subjects only learn the...

One of the most prominent clauses in Government contracts in India is the risk purchase or the risk and cost clause. This authorises the promisee to get the promise fulfilled either by itself or through a third person in case of the promisor’s default and allows the promisee to be compensated...

In a growing number of countries, the delivery of social welfare services is contracted out to private providers, and increasingly, using performance-based contracts. Critics of performance-based incentive contracts stress their potential unintended effects, including cream-skimming and other...