Designing Contracts for the Global Fund: Lessons from the Theory of Incentives
Center for Global Development Working Paper No. 425
38 Pages Posted: 3 Mar 2016
Date Written: February 26, 2016
This paper uses contract theory to suggest simple contract designs that could be used by the Global Fund. Using a basic model of procurement, we lay out five alternative options and consider when each is likely to be most appropriate. The rest of the paper then discusses how one can build a real world contract from these theoretical foundations, and how these contracts should be adapted to different contexts when the basic assumptions do not hold. Finally, we provide a synthesis of these various results with the aim of guiding policy makers as to when and how ‘results-based’ incentive contracts can be used in practice.
Keywords: Contracts, Global Fund, contract theory, theory of incentives
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