Session 4 Incentive and motivation design to encourage

Session 4: Incentive and motivation design to encourage local government officials to work Du T. Huynh Senior Lecturer, Fulbright School of Public Policy and Management 12 -2020

Presentation outline 1. The nature of human being 2. Irrational collective action/“Hard” public choice 3. Reversed incentive 4. Rational collective action/“Soft” public choice 5. Mechanism design for government officials to work

Part I: Irrational Collective Action and Problems of the Public Sector

The nature of human being • Maslow Pyramid • Goals of government officials – Income – Promotion 4

Irrational collective actions • Macur Olson: “Rational, self-interested individuals will not act to achieve their common or group interests. ” • Irrational collective actions 5 dollar pizza 50 dollar lobster 5

Principal – Agent Problem Delegates authotiry Principal Conflict of Interests Acts and makes decision Agent

Reversed/wrong incentive • Regulations are usually ambiguous • What happens when government officials work hard for common interests? • What happens when government officials make difficulties for others?

What will happen? • Individual interests Collective interests 8

Part II: Rational Collective Action and Solutions

Rational collective action • Elinor Ostrom: “Individuals pursuing private purposes will also take proper account of public value. ” • Individual interests Collective interests

Salary of the heads of governments • • • Singapore 1, 610 K, 27. 9 times GDP United States 400 K, 9. 1 Gemarny 370 K, 6. 7 Japan 255 K, 5. 3 Philippines 96, 32. 1 Indonesia 52 K, 13. 3 Thailand 50 K, 7 Myanmar 41 K, 31 Vietnam 8 K, 3. 4 Lee Kuan Yew: “We did not bring Singapore from the Third to the First World by headhunting ministers willing to sacrice their children’s future when undertaking a public service duty. We took a pragmatic course that does not require people of caliber to give up too much for the public good. We must not reduce Singapore to another ordinary country in the Third World by dodging the issue of competitive ministerial remuneration. ”

Public entrepreneurship • Public entrepreneurs are energetic and deft public sector leaders who are expand the scope of feasible action by mobilizing public support, mollifying critics, securing resources, and managing conflict, often through many years of planning, authorization, and implementation. • Examples – Eisenhower with the national highway system in the United States. – Salvucci in the Big Dig Project in Massachusetts – Park Chung-hee in South Korea. – Lee Kwan Yew in Singapore. – Vo Van Kiet, Vietnam.

Mechanism design for government officials to work • Public entrepreneurship • Supporting coalition • Long-term interest partners or pressure

1 4 Erich von Manstein’s Matrix Stupid Intelligent Lazy (i) (ii) Hard-working (iii) (iv)

1 5 Choosing Personnel Matrix Talkative Silent Action (i) (ii) Not-action (iii) (iv)

1 6 Eisenhower’s Matrix Urgent Not Urgent Important (i) (ii) Not Important (iii) (iv)

Thank you for your attention! Du T. Huynh 12 -2020