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Principal-agent theory alerts principals to their problematic relationship with agents. The former are encouraged to take deliberate action to counter asymmetries in knowledge, moral hazard etc. To avoid this, principals should determine outcomes and contracts and incentives should be designed to achieve them. This approach has influenced the form of purchaser-provider arrangements, including the Job Network. This article reviews impacts, which include incentives for gaming and increased transaction costs. Another survey highlighted the extent to which innovation in the disability employment sector had depended on collaboration, which competition would end. The article then sketches an alternative pragmatic or experimental approach, which assumes that the centre can never establish outcomes that are other than provisional and corrigible. Program design needs to be built around this fundamental fact. Learning not 'carrots and sticks' is the appropriate form of relationship. The article explores the feasibility of this approach in a Job Network context.

Item Type:	Refereed Article
Keywords:	innovation, public policy, human services
Research Division:	Studies in Human Society
Research Group:	Policy and Administration
Research Field:	Public Policy
Objective Division:	Law, Politics and Community Services
Objective Group:	Government and Politics
Objective Field:	Public Services Policy Advice and Analysis
Author:	Marsh, MI (Professor Ian Marsh)
ID Code:	58592
Year Published:	2009
Web of Science® Times Cited:	5
Deposited By:	Australian Innovation Research Centre
Deposited On:	2009-10-15
Last Modified:	2014-12-03
Downloads:	0