Behaviour, Incentives and Contracts:
Research Themes

Incentives and the Labour Market

The classic questions of how to best motivate people, what is the right mix of explicit and indirect incentives, how to organise production, are still with us. The questions are as relevant to public and private policy as they are to deep theory. Across a vast range of issues, from public goods provision through to development economics, researchers continually come back to these issues.

A particularly thorny challenge is to design incentives for health practitioners, and to decide the shape of efficient market structures for the delivery of health services. These matters closely connect with the Work and Well-being programme. Tim Barmby, Hans Hvide and John Skatun (Aberdeen), and Martin Chalkley (Dundee), Maia Guell, Sevi Rodriguez-Mora, Andy Snell, Jonathan Thomas (Edinburgh) and Fabio Aricó and David Ulph (St. Andrews) are among those working in this field.

View Selected Publications

Contracts and Industrial Organisation

Another set of classic questions concern industrial organisation: the nature of competition and barriers to entry, incentives to invest, the optimality of the product mix, the role of regulators and the state, the legislative framework.

Related to these questions are some foundational issues to do with the nature of the firm, the ownership of property rights, the distinction between private and public ownership, the incompleteness of contracts, the design of corporate governance structures.

John Moore, József Sákovics, Kohei Kawamura and Jonathan Thomas (Edinburgh), Mark Schaffer (Heriot-Watt), John Beath, Jim Jin, Manfredi La Manna, Gavin Reid (St. Andrews) and Giuseppe De Feo (Strathclyde) are among those working in this field, on both empirical and theoretical research.

View Selected Publications

Financial Contracting and Money

The theory and nature of economic contracting has proved important to our understanding of financial arrangements and institutions. Everything, from the nature of money and trust through to central banking, from personal bankruptcy to international insolvency, from entrepreneurship to Public Private Partnerships, comes back to primitive questions of trust, commitment and timing.

Again, there are positive and normative issues at stake: for example, how and why does the financial system appear to go wrong; what role should the government have in ameliorating financial risk; how should bankruptcy rules be designed? These issues directly connect with the Macroeconomics, Financial Linkages and the Regions programme. John Moore, Andrew Snell, Jonathan Thomas (Edinburgh) and Charles Nolan (St. Andrews) are among those working in this field.

John Moore has given public lectures on this research theme at the University of Oxford (Clarendon Lectures), the South-Asian and North-American Meetings of the Econometric Society (Jacob Marschak and Walras-Bowley lectures), and at various central banks around the world.

View Selected Publications

Auctions and Public Mechanisms

The economics profession's theoretical understanding of mechanism design, such as auctions, is now deep. But there remains a gulf between theory and application. What is needed are mechanisms that work in practice, that are robust to the complications of real-world and real-time usage. New tools of analysis are required, new ways of testing for robustness, in conjunction with experimental design. (There have been notable successes: e.g. the design and implementation of telecommunication spectrum auctions.)

Francesca Flamini and Alexander Kovalenkov (Glasgow), Ahmed Anwar, Simon Clark, Ed Hopkins, Tatiana Kornienko, József Sákovics (Edinburgh) and Marco Faravelli (St. Andrews) are among those working in this field.

View Selected Publications

The Creation, Evolution and Revolution of Groups and Institutions

A central theme of Political Economy is how order is created in the Hobbesian jungle. How do people reconcile their differences in order to realise gains from co-operation? What safe-guards do they put in place to retain the stability of a system? How do they react if the system changes all the same? These are deep and ever relevant questions that need to be addressed to understand our society.

Erika Seki (Aberdeen), Alexander Kovalenkov (Glasgow), Colin Jennings (Strathclyde), Paul Hare, Philippe LeMay-Boucher and Mark Schaffer (Heriot-Watt), József Sákovics, Santiago Sánchez-Pagés, Jonathan Thomas (Edinburgh) are among those working in this field.

View Selected Publications

Coordination, Communication and Learning

In order to arrive at socially optimal outcomes it is fundamental that individuals are able and willing to coordinate their actions. In the presence of private information, this difficulty is compounded by the need for agents to reveal such knowledge, as they may not have the right incentive to do so. Sometimes coordination can only be achieved over time, as the agents learn to adjust to each other. Hence the study of situations involving communication and coordination is of great importance.

Juergen Bracht, Nick Feltovich and Erika Seki (Aberdeen), Martin Jones (Dundee), Olga Gorbachev, Ed Hopkins, Kohei Kawamura, József Sákovics, Santiago Sánchez-Pagés and Jakub Steiner (Edinburgh) are among those working in this field.

View Selected Publications