Title page for ETD etd-05112009-111101

Type of Document Dissertation
Author Lee, Dongryul
Author's Email Address lee78@vt.edu
URN etd-05112009-111101
Title Three Essays on Economic Agents' Incentives and Decision Making
Degree PhD
Department Economics
Advisory Committee
Advisor Name Title
Haller, Hans H. Committee Chair
Giles, Robert H. Jr. Committee Member
Kats, Amoz Committee Member
Tideman, Thorwald Nicolaus Committee Member
  • Open-source Projects
  • Intrinsic and Extrinsic Motivations
  • Public Goods
  • Delegation
  • Weakest-link Contests
  • Incentives
  • Information
Date of Defense 2009-04-29
Availability unrestricted
This dissertation consists of three essays on theoretical analysis of economic agents' decision making and incentives. Chapter 1 gives an outline of the subjects to be examined in the subsequent chapters and shows their conclusions in brief.

Chapter 2 explores the decision problem of a superordinate (a principal) regarding whether to delegate its authority or right to make a decision to a subordinate (an agent) in an organization. We first study the optimal contracting problem of the superordinate that specifies the allocation of the authority and wage in a principal-agent setting with asymmetric information, focusing on two motives for delegation, "informative" and "effort-incentive-giving" delegation. Further, we suggest delegating to multiple agents as a way of addressing the asymmetric information problem within an organization, focusing on another motive for delegation, "strategic" delegation.

Chapter 3 analyzes the behavior of players in a particular type of contest, called "the weakest-link contest". Unlike a usual contest in which the winning probability of a group in a contest depends on the sum of the efforts of all the players in the group, the weakest-link contest follows a different rule: the winning probability of a group is determined by the lowest effort of the players in the group. We first investigate the effort incentives of the players in the weakest-link contest, and then check whether the hungriest player in each group, who has the largest willingness to exert effort, has an incentive to incentivize the other players in his group in order to make them exert more effort.

Chapter 4 examines the decision making of software programmers in the software industry between an open source software project and a commercial software project. Incorporating both intrinsic and extrinsic motivation on open source project participation into a stylized economic model based on utility theory, we study the decision problem of the programmers in the software industry and provide the rationale for open source project participation more clearly. Specifically, we examine the question of how the programmers' intrinsic motivation, extrinsic motivation, and abilities affect their project choices between an open source project and a commercial project, and effort incentives.

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