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A key strategy to motivate proenvironmental behavior (PEB) involves the promise of monetary rewards. Financial incentives are intuitively appealing because they can increase an individual's expected benefits for engaging in the PEB; however, there is concern that incentives can transform motivations for the PEB. The purpose of this study was to examine the role of financial incentives on behavior across time. Specifically, I used an experimental design to examine the immediate effects payments on litter-removal effort (Phase 1) followed by effort after payments were no longer available (Phase 2). Undergraduate students were recruited for a trail evaluation study and randomly assigned to a control treatment or a financial incentive treatment. In Phase 1 I asked students to pick up discarded litter during their trail evaluation (PEB). The incentive condition offered students $0.25 for each of the possible 16 items of trash planted along the trail. The control condition simply asked students to help by picking up trash. Students were again asked to collect trash in Phase 2 but the financial incentive condition was not offered a payment. In accordance with self-determination theory I expected payments to increase effort in the short term and suppress effort when the incentive was no longer provided. Although there was an overall decrease in effort between phases within both conditions, the results of a repeated-measures ANOVA indicated no difference between the control and incentive condition in either phase. Given the lack of a statistically significant finding, it is possible that there are conditions under which payments provide no greater inducement than a simple request for help. This idea is supported by a meta-analysis, which identifies a consistent lack of effect for easily-performed tasks. Additional research is needed to further understand the conditions under which financial incentives can motivate and sustain PEBs. / Master of Science

Incentives are an effective mechanism to align the interests of decision-makers. For example, employers use incentives to motivate their employees to take actions that benefit both the employers and the employees. Incentives also play a role in the interaction between firms, for example in a supply chain network. The prevalent approach to analyzing interactions between decision-makers is through principal-agent models. Due to mathematical intractability, the majority of these models are restricted to the interaction between two decision-makers. However, modern organizations have many decision-makers that interact with each other in a network. Therefore, effective incentive mechanisms for systems with many decision-makers (agents) must account for the numerous network interdependencies. The objective of this dissertation is to design incentive mechanisms for systems with many agents, with a focus on teams and multi-firm networks. Methodologically, our approach applies and builds upon multiscale decision theory (MSDT). MSDT can effectively and efficiently model the interdependencies between decision-makers and their optimal response to incentives. This dissertation consists of three parts. The first part focuses on incentives in teams, where multiple subordinates work under a single supervisor. The contribution of the team model to MSDT is the introduction of continuous decision variables; prior MSDT models have only used discrete decision variables. In the second and third part of this dissertation, we analyze a network of collaborating firms in a systems engineering project and focus on verification decisions. We introduce a belief-based model, which is a novel approach for both MSDT and verification modeling in systems engineering. Using MSDT, we determine how incentives can be used by a contractor to motivate a subcontractor to verify its design when the subcontractor prefers not to do so. We extend this two-firm model to a general multi-firm network model for verification coordination and incentivization. This firm network resembles the inter-firm collaboration present in most large-scale system engineering projects. Through better aligned verification activities, system-wide verification costs decrease, while the reliability of the final system improves. / Ph. D. / Incentives are often used to align the interests of decision-makers in modern organizations. Employers use incentives to motivate their employees to take actions that benefit both the employers and the employees. Incentives also play a role in the interaction between multiple firms, for example in a supply chain network. The prevalent approach to analyzing interactions between decision-makers is through the so-called principal-agent models. Due to mathematical intractability, the majority of these models are restricted to the interaction between two decision-makers. However, modern organizations have many decision-makers that interact with each other in a network. Therefore, effective incentive mechanisms for systems with many decision-makers (agents) must account for the numerous interdependencies that arise due to the organizational structure. The objective of this dissertation is to design incentive mechanisms for systems with many agents, with a focus on teams and multi-firm networks. Methodologically, our approach applies and builds upon multiscale decision theory (MSDT). MSDT can effectively and efficiently model the interdependencies between decision-makers and derive optimal organization-wide incentives. This dissertation consists of three parts. The first part focuses on incentives in teams, where multiple employees work under a single manager. The contribution of the team model to MSDT is the introduction of continuous decision variables; prior MSDT models have only used discrete decision variables. In the second and third part of this dissertation, we analyze a network of collaborating contractors in a systems engineering project and focus on design verification strategies. We introduce a belief-based model, which is a novel approach for both MSDT and verification modeling in systems engineering. Using MSDT, we determine how incentives can be used by a contractor to motivate a subcontractor to verify its design when the subcontractor prefers not to do so. We extend this two-firm model to a general multi-firm network model for verification coordination and incentivization. This firm network resembles the inter-firm collaboration present in most large-scale system engineering projects. Through better aligned verification activities, system-wide verification costs decrease, while the reliability of the final system improves.

Privately owned lands provide a number of benefits to humans, including food, clean air and water, and building materials. Private lands are also home to a host of wildlife species and the habitats that they rely upon for survival. As such, balancing human and ecological needs on private lands is of critical importance. Stewardship is a term popularly used to refer to this balanced approach of managing land for a host of benefits. When landowners lack the interest, ability, or willingness to incorporate stewardship into their management strategies, incentives are often provided to spur greater conservation outcomes. This two-part case study is focused on private land stewardship. Using qualitative data analysis, I first examined the behaviors that a sample of production-oriented ranchers defined as stewardship. I then explored the environmental values underlying their behaviors. Utilitarian values dominated the four broad themes that emerged from respondents' operationalization of stewardship, including: maintaining economically productive rangelands, protecting water resources, maintaining an aesthetically pleasing property, and providing for wildlife. Next, I sought to better understand the impact of incentives on durable conservation behaviors. As incentives can reduce intrinsic motivation, I used Self-Determination Theory as a framework for surveying participants in an existing conservation incentive program. The results suggest that landowners maintained their willingness to continue protecting a threatened bird species following the removal of an incentive. Each paper concludes with an analysis of findings within the context of the empirical literature, and present potential practical implications for future conservation efforts. / Master of Science

The effects of different types of reward systems on perceived conflict and coalition formation among those involved in organizational buying decisions are investigated. The buying decision process is examined as group behavior, and the group or buying center is used as the unit of analysis. An experimental design is utilized to test a number of hypotheses concerning the impacts of cooperative, competitive, and independent reward systems on the level of perceived conflict and the extent of coalition formation within the buying center. Groups consisting of representatives from a number of different departments within a hypothetical organization are asked to make a series of vendor choice decisions while being evaluated in terms of one of these three reward systems. The findings suggest that perceived conflict increases as one moves from a cooperative to an independent, and then to a competitive, reward system. Coalitions appear most frequently under an independent reward system, less frequently under a competitive reward system, and infrequently under a cooperative reward system. Implications are drawn both for buying and selling organizations. / Ph. D.

Thesis advisor: John J. Piderit / This paper examines state and county-exclusive incentives on battery electric vehicle (BEV) registration in the United States. Using two main methods, a differences-in-differences method and a sigmoidal growth rate equation, I examine the impact of non-federal incentives on the total amount of electric vehicles between 2017 and 2022, as well as estimate the years that each state will reach its net-zero goals for carbon emissions in the transportation sector. I hope to provide a deeper understanding of the effectiveness of incentive policy, based on differing levels of incentive policy between regions, in order to best increase electric vehicle adoption in a cost-effective method. In addition, I hope that my estimates of net-zero projections will serve as a beneficial comparison to track states’ respective progress towards sustainable energy in vehicles. These findings can be used to assist policymakers in determining appropriate BEV adoption policies based on regional consumer demographics and needs, as well as visualize a timeline for the next century of rapid electric vehicle growth. / Thesis (BA) — Boston College, 2024. / Submitted to: Boston College. Morrissey School of Arts and Sciences. / Discipline: Economics. / Discipline: Departmental Honors.

Yes / We derive the optimal investment timing and real option value for a facility with price and quantity uncertainty, where there might be a government subsidy proportional to production quantity. Where the subsidy is proportional to the multiplication of the price and quantity, dimensionality can be reduced. Alternatively, we provide quasi-analytical solutions for different quantity subsidy arrangements: permanent (policy is certain); retractable; suddenly permanent; and suddenly retractable. Whether policy uncertainty acts as a disincentive for early investment depends on the type of subsidy arrangement. The greatest incentive for early investment is an actual retractable subsidy, a ‘flighty bird in hand’.

Abstract: There is an ongoing debate on whether risk-taking incentives align risk-averse managers’ interests with those of shareholders or whether such incentives lead to excessively risky firm and leverage policies. In this study, we shed light on this debate by using CEO risk-taking incentives, measured by the sensitivity of CEO wealth to changes in stock return volatility (Vega), and explain how Vega affects firms’ security issuance and repurchase activities. In general, we find that a higher Vega increases (decreases) the likelihood of debt issuance (share issuance) and it decreases (increases) the propensity of debt retirement (share repurchase). However, in high-levered firms, the positive effect of Vega on debt issuance and the negative influence of Vega on debt retirement are diminished. One the other hand, for equity issuance and repurchases, high leverage does not seem to alter the impact of Vega. These findings have three main implications: 1) in general, CEO risk-taking incentives (Vega) do affect the financing decisions of firms by increasing firms’ degree of leverage, (2) when existing leverage is high, CEO risk-taking incentives do not seem to induce CEOs to take excessive financial risks through debt issuance, but such incentives encourage them to continue repurchasing shares that would lead to even higher debt ratios and non-operational risks, and (3) firms with high Vega do not seem to adopt target debt ratios. JEL Classification: G30, G32, J33