Situational Contracting as a Mode of Governance

Abstract

This article introduces the option to make individual access to excludable public benefits conditional on ascertainable efforts to limit claims. Contracts are situational when front-line staff are mandated to allow for differences in the ability to perform of their counterparts and to offer customized enabling facilities to improve capabilities. Degrees of freedom and transaction costs are controlled through political guidance in protocols, on the basis of apply-or-explain. Situational contracting reveals individual preference, reduces opportunism, furthers trust and induces open innovation. The article presents results of an early application in The Netherlands.

Key words:

• Asymmetrical info
• institutional design
• motivation analysis
• public management
• reciprocity

ACKNOWLEDGEMENT

The author is grateful to Peter Cornelisse, Bob Haveman, Arnold Heertje, Peter Marks, Ig Snellen and two unknown referees for helpful comments on an earlier draft.