to suboptimal incentives. When a regulated firm compares the marginal change in its cost norm with its marginal cost of … that the eight-year catch-up period allowed in this regulation gives strong incentives to reduce costs since the firms can … the other hand, this scheme also provides very weak quality incentives since it takes eight years before the extra cost of …

We study, theoretically and empirically, the effects of incentives on the self-selection and coordination of motivated …). Agents differ in their motivation to exert social effort. Our model predicts that lowering incentives for selfish effort in … prediction in a lab experiment allowing us to cleanly separate the selection effect from other effects of low incentives. Results …