Rewards to prevent supervisors from accepting bribes create incentives for extortion. This raises the question whether a supervisor who can engage in bribery and extortion can still be useful in providing incentives. By highlighting the role of team work in forging information, we present a...

I show that stochastic contracts generate powerful incentives when agents suffer from probability distortion. When implementing these contracts, the principal can target probability distortions in order to inflate the agent's perceived benefits of exerting high levels of effort. This novel...

The discussion about health care systems focuses on the dynamics of expenditures and on the weak growth of the revenue base. In this discussion it is widely overseen that medical expenditures and supply of medical services crucially depend on the compensation of physician services. The paper...

Interactions between players with private information and opposed interests are often prone to bad advice and inefficient outcomes, e.g. markets for financial or health care services. In a deception game we investigate experimentally which factors could improve advice quality. Besides advisor...

Diagnostic errors are prevalent and can result in severe patient harm. Identifying a correct diagnosis often necessitates significant diagnostic effort. Nonetheless, most physician payment schemes are procedure-based and do not account for diagnostic effort or accuracy, due to observability...

Classic financial agency theory recommends compensation through stock options rather than shares to induce risk neutrality in otherwise risk averse agents. In an experiment, we find that subjects acting as executives do also take risks that are excessive from the perspective of shareholders if...