Exam 22: Managing Incentives

Amazingly, most doctors don't wash their hands between patients. This is a major problem since the risk of infection runs high. One theory suggests arrogance comes with experience as good doctors insist contamination must come from other hospital personnel, not them. When Cedars-Sinai Hospital sought to eliminate this problem, by far the most effective method was providing photographs of bacteria cultures from the hands of the hospital's Chief of Staff Advisory Committee, composed mostly of top doctors. The pictures served as screen savers for every computer in the hospital. What kind of incentive structure does this most closely resemble?

Economists usually think that what matters for choices are preferences and constraints such as prices and income.

Schools are rewarded for how well their students perform on standardized test scores but allowed to exclude test scores for learning disabled students when submitting results to the state. What undesirable incentive does this policy provide?

Piece rates between workers of different productivity levels will lead to more income inequality.

The difference between a piece rate and an hourly rate is:

Paying computer programmers by line of code will likely get you lots of code that is inefficient and poorly written.

Piece rates attract more productive workers.

If a college professor implements a grading scale based on tournament theory:

Strong incentives are a good idea as long as the benefits outweigh the costs of possible cheating.

Which of the following is the most correct statement about piece rates?

Today, a large fraction of executives' pay is tied to:

Private prisons in the United States hold about ______ of all prisoners.

A poor teacher who grades on an absolute scale introduces:

Using emoticons on utility bills that are higher or lower than average has been shown to change the behavior of consumers.

Which of the following risks increases when a bad teacher is grading on a curve?

Nonmonetary incentives are:

Enron and other similar scandals were in part the result of a strong incentive scheme.

An hourly wage pays workers for their output, whereas a piece rate pays workers directly for their input.

Instituting an incentive scheme is guaranteed to narrow the gap between "what you get" and "what you pay for."

Compensating salespersons for the number of cars they sell is an example of: