Incentive Design

Innovation can be shaped through carefully designed incentives, including prizes, advance market commitments, pay-for-outcomes procurement, and funding of research and development.

We study approaches for improving the alignment incentives for innovation for firms with what is most beneficial for social welfare. Such “market shaping” approaches include governments or philanthropists paying for outcomes, advance market commitments, and income sharing agreements where workforce training programs are paid based on the improvement in worker income. Our work on measurement is integrally connected to the success of market shaping, since reliable measures of relevant outcomes are essential to ensure that firm payments are aligned with societal goals.

Project Abstracts

Read about a few of the research projects the lab is currently working on.

Accelerating Health Technology Innovation to Address COVID-19

Accelerating the development of health technology such as treatments, diagnostics, and vaccines is crucial to ending the COVID-19 crisis as quickly as possible. This project evaluates alternative methods for speeding up the process, including the design of incentives for development and manufacturing, as well as approaches for optimizing clinical trials using shared control groups and adaptive experiments.


Designing a Pay-for-Outcomes Initiative

Along with Harvard University’s Center for Educational Policy Research and Laurence Holt, the lab is part of a project in the initial phase of designing a pay-for-outcomes initiative to improve learning for children in K-12. The group has received a planning grant. This initiative will unlock R&D investment on learning outcomes in the U.S. K-12 market such as middle years algebra readiness.



Learn firsthand from some of the educational researchers and practitioners associated with the lab.

Michael Kremer: “Copays” to Shape the Vaccine Market to Reduce Global Poverty

Michael Kremer, Nobelist and Gates Professor of Developing Societies at Harvard, was lead economist in an effort by the global health community to overcome the private sector’s underinvestment in vaccines for diseases of the poor.

Jonty Olliff-Cooper: Creating a Silicon Valley for the Social Sector

Olliff-Cooper, MS 18, engagement manager at McKinsey & Company, is promoting relatively new payment models whereby governments compensate providers based on outcomes instead of upfront, including payment-by-results programs like the impact bond.

Canice Prendergast: Feeding America More Efficiently

Prendergast, professor of economics at the University of Chicago Booth, is using market mechanisms to redesign the food distribution system of Feeding America, the nation’s largest supplier of food to regional food banks.

Shlomy Kattan: How XPRIZE Is Fighting Adult Low Literacy

Kattan, Executive Director of Adult Literacy at XPRIZE, improving access to literacy instruction for low-income and low-skilled adults through a competition.

Eric Liu: Leveraging Incentives and Data for Social Good

Liu, MBA candidate ‘20, carved out a special niche in the use of data science as a tool for social change, reforming the government contracting process, and carrying out projects that help agencies do a better job of serving people in need.