The Costs of Misaligned Incentives: Energy Inefficiency and the Principal-Agent Problem

• 成果类型: Article
• 署名作者: Blonz, Joshua A.
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.20210208
• 发表日期: 2023
• 页码: 286-321
• 关键词: regression discontinuity design; moral hazard; EFFICIENCY; CONTRACTS; investments; pay; manipulation; inference; savings

摘要

In many settings, misaligned incentives and inadequate monitoring lead employees to take self-interested actions. This paper identifies and quantifies the costs of this principal-agent problem in the context of an energy efficiency appliance replacement program. I show that contractors (agents) hired by the electric utility (the principal) increase their compensation by intentionally misreporting program data to authorize the replacement of nonqualified refrigerators. I estimate that each unqualified replacement reduces program benefits by $106 and saves 30 percent less electricity than replacements that follow program guidelines. The same program without a principal-agent distortion would increase program benefits by $60 per replacement. (JEL D82, L68, L94, L98)