When incentives work well, individuals prosper. When incentives
are poor, the pursuit of self-interest is self-defeating. This book is wholly devoted to the topical subject of incentives
from individual, collective, and institutional standpoints. This third edition is fully updated and expanded, including a
new section on the 2007-08 financial crisis and a new chapter on networks as well as specific applications of school placement
for students, search engine ad auctions, pollution permits, and more. Using worked examples and lucid general theory in its
analysis, and seasoned with references to current and past events, Incentives: Motivation and the Economics of Information
examines: the performance of agents hired to carry out specific tasks, from taxi drivers to CEOs; the performance of institutions,
from voting schemes to medical panels deciding who gets kidney transplants; a wide range of market transactions, from auctions
to labor markets to the entire economy. Suitable for advanced undergraduate and graduate students studying incentives as part
of courses in microeconomics, economic theory, managerial economics, political economy, and related areas of social science.
1. Equilibrium, efficiency, and asymmetric information; 2. Basic models and tools; 3. Hidden action; 4. Corporate governance;
5. Hidden characteristics; 6. Auctions; 7. Voting and preference revelation; 8. Public goods and preference revelation; 9.
Matching; 10. Networks; 11. General competitive equilibrium.
This book examines incentives at work to see how and how
well coordination is achieved by motivating individual decision makers.