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Using utility theory to optimize a salary incentive plan for grant-funded faculty
1Yale University School of Medicine, New Haven, Connecticut, USA. kjoiner@arizona.edu
Summary
The No Expense Model for faculty salary incentives is preferred over the Expense Model due to more favorable risk attitudes and greater cost recoveries. Utility modeling can optimize incentive plans for research faculty.
Area of Science:
- Health Sciences
- Medical Education
- Research Administration
Background:
- Limited understanding of optimal salary incentive plans for academic health center faculty funded by research grants.
- Need for structured approaches to faculty compensation in research-intensive environments.
Purpose of the Study:
- To examine the impact of incentives on faculty preferences for two distinct salary plans.
- To determine the optimal structure for a salary incentive plan for research faculty at Yale University School of Medicine.
Main Methods:
- A three-part survey instrument was administered to a convenience sample of 40 faculty.
- Utility theory was employed to quantify faculty preferences for the Expense Model and No Expense Model.
- Outcomes were projected for both models under varying funding probabilities.
Main Results:
- 27 faculty responded, exhibiting risk-averse attitudes towards the Expense Model, with variations by rank.
- Faculty showed more homogeneous, risk-seeking attitudes towards the No Expense Model.
- The No Expense Model yielded greater cost recoveries.
Conclusions:
- Utility modeling indicates the No Expense Model is preferable to the Expense Model for both equity and efficacy.
- Optimal incentive payments are higher for the Expense Model and increase as funding probability decreases.
- Modeling provides a framework for determining optimal incentive plans and bonus structures for research faculty.