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

Abstract

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

Suggested Citation

Wren-Lewis, Liam, Designing Contracts for the Global Fund: Lessons from the Theory of Incentives (February 26, 2016). Center for Global Development Working Paper No. 425. Available at SSRN: https://ssrn.com/abstract=2740556 or http://dx.doi.org/10.2139/ssrn.2740556

Liam Wren-Lewis (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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