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By Boris Pleskovic, Michael Bruno

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For instance, while every firm has slightly different travel needs, it is possible to obtain a range of estimates of the administrative costs associated with travel. These costs can then be used to determine how government agencies compare and to use performance relative to private sector norms as a basis for rewards. But many public sector activities are different from activities conducted within the private sector. Public sector activities are disproportionately administrative in nature, making measurement of individual performance particularly difficult.

Mishkin 29 Comments Masahiko Aoki Edward J. Kane 63 69 Floor Discussion 76 Bank Insolvency: Bad Luck, Bad Policy, or Bad Banking? Gerard Caprio Jr. and Daniela Klingebiel 79 Comments Donald J. Mathieson Roberto Zahler 105 108 Floor Discussion 111 Reducing Poverty: Targeted Programs and Rural Finance 115 Political Economy of Alleviating Poverty: Theory and Institutions Timothy Besley 117 Comments Arsenio M. Balisacan Karla Hoff 135 139 Floor Discussion 145 Page iv Rural Finance in Africa: Institutional Developments and Access for the Poor Ernest Aryeetey 149 Comments Jean-Philippe Platteau Dominique van de Walle 174 180 Floor Discussion 185 Legal Systems and Economic Development 189 The Rule of State Law and the Rule-of-Law State: Economic Analysis of the Legal Foundations of Development Robert D.

In many other activities there is no single metric of performance. Consider education. Rewarding performance only in terms of basic skills (which can be measured more easily than other skills) will divert resources away from developing higher-order and cognitive skills. It may, however, be possible to redesign the production process to mitigate these effects (by assigning different teachers different tasks, for example). Whether this is desirable depends on the magnitude of the incentive distortions relative to the economies of scope.

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