Friday , October 23 2020
Home / Managerial Econ / High-Powered Incentives Kill

High-Powered Incentives Kill

Summary:
In the just published article, "The Perils of  High-Powered Incentives: Evidence from Colombia’s False Positives,"Acemoglu, Fergusson, Robinson, Romero, and Vargas investigate incentivizing the military. We investigate the use of  high-powered incentives for the Colombian military and show that this practice produced perverse side effects. Innocent civilians were killed and misrepresented as guerillas  (a phenomenon known in Colombia as “false positives”). Policymakers (and managers) should anticipate that incentivizing an outcome enough will alter behaviors to attain the outcome both by the desired methods and by methods antithetical to the organization. Perhaps, though, for managers the perverse consequences result the deaths of innocents less often.Without incentives, we should

Topics:
[email protected] (Michael Ward) considers the following as important: ,

This could be interesting, too:

[email protected] (Luke Froeb) writes Reducing leverage hurts options buyers

[email protected] (Luke Froeb) writes When will enough doses of FDA-approved COVID-19 vaccine(s) to inoculate 25 million people be distributed in the United States?

[email protected] (Luke Froeb) writes Arbitrage opportunity in betting markets?

[email protected] (Luke Froeb) writes One in eight women will get breast cancer, but who gets screened?

In the just published article, "The Perils of  High-Powered Incentives: Evidence from Colombia’s False Positives,"Acemoglu, Fergusson, Robinson, Romero, and Vargas investigate incentivizing the military.
We investigate the use of  high-powered incentives for the Colombian military and show that this practice produced perverse side effects. Innocent civilians were killed and misrepresented as guerillas  (a phenomenon known in Colombia as “false positives”).

Policymakers (and managers) should anticipate that incentivizing an outcome enough will alter behaviors to attain the outcome both by the desired methods and by methods antithetical to the organization. Perhaps, though, for managers the perverse consequences result the deaths of innocents less often.

Without incentives, we should anticipate a principle/agent problem. In this case, that might mean more "false negatives" or more un-apprehended guerillas committing violence against innocents. Setting appropriate incentives to balance the two is a particularly delicate decision-error problem.

Leave a Reply

Your email address will not be published. Required fields are marked *