Different Strokes for Different Folks? Experimental Evidence on the Effectiveness of Input and Output Incentive Contracts for Health Care Providers with Varying Skills
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Manoj Mohanan
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Katherine Donato
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Grant Miller
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Yulya Truskinovsky
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Marcos Vera-Hernández
- American Economic Journal: Applied Economics (Forthcoming)
Abstract
A central issue in designing incentive contracts is the decision to reward agents’ input use versus
outputs. The trade-off between risk and return to innovation in production can also lead agents
with varying skill levels to perform differentially under different contracts. We study this issue
experimentally, observing and verifying inputs and outputs in Indian maternity care. We find that
both contract types achieve comparable reductions in post-partum hemorrhage rates— but
payments for outputs were four times that of inputs. Providers with varying qualifications
performed equivalently under input incentives, while providers with advanced qualifications may
have performed better under output contracts.
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