Incentives and spillovers in R&D activities: an agency-theoretic analysis of industry-university relations

In this paper, I study industry-university relations in a principal- agent framework. Following the existing literature, these relations are interpreted in two ways: (1) as occurring through spillovers of knowledge among different groups of researchers, working for different institutional settings; or (2) as more formal interactions, through the possibility, for a scientist, to directly respond to incentives defined by the different communities she may belong to. I formalize these two configurations in a unified framework. I account for: (1) the inherent difficulty in measuring the impact of scientific activities; and (2) the multiplicity of activities that scientists perform. I combine multi-task agency models with distorted performance measures and common agency models. My model identifies several types of incongruities between an agent's actions and the desired outcomes. These incongruities derive also from the strategic interaction among the principals. I also identify some potentially distortionary behavioral effects of the presence of spillovers.Economics of Science; Agency Theory; Industry-University Relations; Science Policy; R&D Management.

Motivating Altruism: A Field Study

This paper analyzes the effects of a legislative provision that grants a one-day paid leave of absence to blood donors who are employees in Italy. The analysis is based on a unique dataset with the complete donation histories of the blood donors in an Italian town. The cross-sectional variation in job market status and type of employers, and job switching over time by a subset of donors, are the sources of variation we employ to study whether donors are responsive to the paid-day-off incentive in the choice of their donation days, and in the frequency of their donations. Our results indicate that economic considerations do affect blood donation decisions, for donors donate in days of the week that, given the day-off benefit, maximize their material returns in terms of consecutive days off work. We also find evidence, however, consistent with heterogeneous motivations in different donors, since a subset of donors systematically do not take advantage of the material reward. Finally, we find that the day-off privilege leads donors who are employees to make, on average, one extra donation per year. We discuss the implications of our findings for policies aimed at increasing the supply of blood, and more generally for incentivizing pro-social behavior.incentives, altruism, public good provision, pro-social behavior, public health

Social Image Concerns and Pro-Social Behavior

Using longitudinal data on the entire population of blood donors in an Italian town, we examine how donors respond to an award scheme which rewards them with “medals” when they reach certain donation quotas. Our results indicate that donors significantly increase the frequency of their donations immediately before reaching the thresholds for which the rewards are given, but only if the prizes are publicly announced in the local newspaper and awarded in a public ceremony. The results are robust to several specifications, sample definitions, and controls for observable and unobservable heterogeneity. Our findings are consistent with social image concerns being a primary motivator of pro-social behavior, and indicate that symbolic prizes are most effective as motivators when they are awarded publicly. Because we do not detect a reduction in donation frequency after the quotas are reached, this incentive based on social prestige leads to a net increase in the frequency of donations.incentives, awards, public good provision, pro-social behavior, public health, social prestige

Rewarding Altruism? A Natural Field Experiment

We present evidence from a natural field experiment involving nearly 100,000 individuals on the effects of offering economic incentives for blood donations. Subjects who were offered economic rewards to donate blood were more likely to donate, and more so the higher the value of the rewards. They were also more likely to attract others to donate, spatially alter the location of their donations towards the drives offering rewards, and modify their temporal donation schedule leading to a short-term reduction in donations immediately after the reward offer was removed. Although offering economic incentives, combining all of these effects, positively and significantly increased donations, ignoring individuals who took additional actions beyond donating to get others to donate would have led to an under-estimate of the total effect, whereas ignoring the spatial effect would have led to an over-estimate of the total effect. We also find that individuals who received a reward by surprise were less likely to donate after the intervention than subjects who received no reward, suggesting that for some individuals a surprise reward adversely affected their intrinsic motivations. We discuss the implications of these findings for understanding pro-social behavior.

Will There Be Blood? Incentives and Substitution Effects in Pro-social Behavior

We examine how economic incentives affect pro-social behavior through the analysis of a unique dataset with information on more than 14,000 American Red Cross blood drives. Our findings are consistent with blood donors responding to incentives in a "standard" way; offering donors economic incentives significantly increases turnout and blood units collected, and more so the greater the incentive's monetary value. In addition, there is no disproportionate increase in donors who come to a drive but are ineligible to donate when incentives are offered. Further evidence from a small-scale field experiment corroborates these findings and confirms that donors are motivated by the economic value of the items offered. We also find that a substantial fraction of the increase in donations due to incentives may be explained by donors substituting away from neighboring drives toward drives where rewards are offered, and the likelihood of this substitution is higher the higher the monetary value of the incentive offered and if neighboring drives do not offer incentives. Thus, extrinsic incentives motivate pro-social behavior, but unless substitution effects are also considered, the effect of incentives may be overestimated.incentives, altruism, public good provision, pro-social behavior, public health

WILL THERE BE BLOOD? INCENTIVES AND SUBSTITUTION EFFECTS IN PRO-SOCIAL BEHAVIOR*

We present evidence from observational data on nearly 14,000 American Red Cross blood drives and from a randomized natural field experiment showing that economic incentives have a positive effect on blood donations without increasing the fraction of donors who come to a drive but are ineligible to donate. We also show that the effect of incentives on donations increases with the incentive's economic value. However, we further show that a substantial proportion of the increase in donations due to incentives may be explained by donors leaving neighboring drives without incentives to attend the drive with incentives, and the likelihood of this substitution is higher the higher the monetary value of the incentive offered. We conclude that extrinsic incentives stimulate pro-social behavior, but, unless substitution effects are also considered, the effect of incentives may be overesti mated.

In vitro effects of nonesterified fatty acids on bovine neutrophils oxidative burst and viability

An in vitro study was conducted to examine the influence of nonesterified fatty acids (NEFA) on bovine polymorphonuclear leukocytes (PMN). Eight healthy, midlactating Holstein cows were used as blood donors. Blood PMN were isolated and incubated with a mixture of NEFA, reflecting composition of bovine plasma NEFA at concentrations that were intended to mimic those found in blood of cows undergoing high, moderate, or low lipomobilization intensity (2, 1, 0.5, 0.25, 0.125, and 0.0625 mM). Control samples were incubated in absence of NEFA. Phagocytosis and oxidative burst activities were assessed by a 2-color flow cytometric method, which was based on oxidation of intracellular dihydrorhodamine 123 to green fluorescent rhodamine 123. Oxidative burst products were generated by incubating PMN with Staphylococcus aureus labeled with propidium iodide. A flow cytometric technique was used to detect PMN viability, necrosis, and apoptosis using fluorescein isothiocyanate-labeled annexin-V and propidium iodide. Phagocytic activity was not affected by NEFA. The highest concentration of NEFA (2 mM) was associated with a dramatic increase of phagocytosis-associated oxidative burst activities with a reduction in cell viability (48.0 vs. 97.5% in control samples) and with a marked increase of necrosis (49.4 vs. 0.5% in control samples). Conversely, the mixture of NEFA did not affect the occurrence of apoptosis. Enhancement of the oxidative burst associated with the highest concentration of NEFA might explain the reduced viability and higher percentage of necrosis observed under the same conditions. This study demonstrated a substantial resistance of bovine PMN to an overload of fatty acids. However, observation that the highest concentration of NEFA regulated some PMN functions encourages the possibility of in vivo studies to assess the relationships between intensity of lipomobilization, plasma NEFA, and bovine PMN functions

Knowledge Spillovers, Competition, and R&D Incentive Contracts

This paper models the optimal provision of incentives to corporate scientists, within an environment where effort is multidimensional, firms compete on the product market, knowledge spills over across companies, and scientists have both monetary and non-monetary motivations. The simultaneous consideration of these aspects generates a number of novel results. First, knowledge spillovers lead firms to soften incentives in order not to benffit competitors, but only when product market competition is high. By contrast, greater knowledge spillovers positively affect the provision of incentives when competition is low. Second, the relationship between the intensity of competition and the power of incentives is U-shaped, and the region where the relationship is positive is smaller the higher the knowledge spillovers. Finally, both the incentives for applied and basic research increase with non-pecuniary benefits scientists obtain from basic research, while a trade-off between monetary pay and non-monetary rewards may occur at the level of the fixed salary. These results provide a novel interpretation of some observed R&D organizational choices by companies, offer insights for the management of scientific and other creative workers, and have implications for public policy