Road Construction Incentive Contracts And R

Sebastian Kranz promotes an interesting RTutor project:

Patrick Bajari and Gregory Lewis have collected a detailed sample of 466 road construction projects in Minnesota to study this question in their very interesting article Moral Hazard, Incentive Contracts and Risk: Evidence from Procurement in the Review of Economic Studies, 2014.
They estimate a structural econometric model and find that changes in contract design could substantially reduce the duration of road blockages and largely increase total welfare at only minor increases in the risk that road construction firms face.
As part of his Master Thesis at Ulm University, Claudius Schmid has generated a nice and detailed RTutor problem set that allows you to replicate the findings in an interactive fashion. You learn a lot about the structure and outcomes of the currently used contracts, the theory behind better contract design and how the structural model to assess the quantitative effects can be estimated and simulated. At the same time, you can hone your general data science and R skills.

Click through to a couple of ways to get to this RTutor project and learn a bit about building incentive contracts to modify behavior.  H/T R-Bloggers

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