This chapter examines the role of behavioural incentives as influencing healthcare delivery. It describes decision-making in clinical contexts and the roles of biases that naturally occur in these settings. Sometimes these have negative impacts (e.g., medical errors) and other times positive impacts (e.g., role of social norms for positive change). Pay for performance (P4P) programmes are discussed in this context. This chapter also includes examples of interventions such as defaults in the electronic health record and how antibiotic prescribing programmes that use social norms can be important to change behaviours. However, they need to be applied carefully and in concert with clinical collaboration.

This chapter discusses the concept, design, implementation challenges and emerging models of successful strategic purchasing (SP) in low- and middle-income countries (L&MICs). The purchasing function is concerned with allocation and use of funds to ensure more value for the existing money by setting the right financial incentives to providers and ensuring that all individuals have access to needed health services. There is a marked difference across countries in terms of how they purchase health care. Passive purchasing implies following a predetermined budget or simply paying bills when presented. In contrast, SP involves a continuous search for the best ways to maximize health system performance by proactively answering questions such as – for whom to buy, what to buy, from whom to buy, how to pay and what impact. There are enablers and choke points for implementation of provider payment systems that need consideration. For L&MICs to do SP effectively, calls for building technical capacity in provider payment, greater policy coherence, institutional relationship between government and purchasers, and a step-by-step approach allowing countries to move towards SP.

This chapter instills an appreciation for the powerful effects (both positive and negative) of performance pay on employee behavior. It opens with a performance-pay success story, namely a field experiment by Shearer (2004) in which the piece-rate compensation of Canadian tree planters was changed. It then develops some examples of the darker side of performance pay, including the Wells Fargo employees who opened false accounts to meet a quota. Section 9.2 provides visual representations of performance pay in which the pay graph has a positive slope (i.e., it increases when the worker’s performance measure increases), sometimes linearly as with piece-rate pay and sometimes nonlinearly as with bonuses. The chapter emphasizes the incentive and sorting effects associated with performance pay as well as its prevalence. Workers’ attitudes towards risk (of earnings fluctuations) and how risk affects performance pay is covered, along with performance measurement, various drawbacks of performance pay, and how to design performance-pay contracts. Readers will finish the chapter with an understanding of the advantages and disadvantages of performance pay and when it can be effectively used.

This chapter instills an appreciation for the powerful effects (both positive and negative) of performance pay on employee behavior. It opens with a performance-pay success story, namely a field experiment by Shearer (2004) in which the piece-rate compensation of Canadian tree planters was changed. It then develops some examples of the darker side of performance pay, including the Wells Fargo employees who opened false accounts to meet a quota. Section 9.2 provides visual representations of performance pay in which the pay graph has a positive slope (i.e., it increases when the worker’s performance measure increases), sometimes linearly as with piece-rate pay and sometimes nonlinearly as with bonuses. The chapter emphasizes the incentive and sorting effects associated with performance pay as well as its prevalence. Workers’ attitudes towards risk (of earnings fluctuations) and how risk affects performance pay is covered, along with performance measurement, various drawbacks of performance pay, and how to design performance-pay contracts. Readers will finish the chapter with an understanding of the advantages and disadvantages of performance pay and when it can be effectively used.