Add to ORKGIn this thesis, I use both theoretical and experimental methods to investigate incentive mechanisms of the sort commonly used by firms and governments. I have finished three chapters, two of which focus on how firms choose the appropriate incentive mechanisms to motivate their employees and the other one investigates how governments design mechanisms to improve social welfare. Chapter two provides a novel explanations why stock options are widely used in executive incentive contracts. Chapter three titled ``Ask Your Workers to Report Frequently, But Not Too Often\u27\u27 studies how having employees reporting their progress to supervisors affects the employees\u27 work effort. Chapter four entitled ``Arbitrage Opportunities: Anatomy and Rem...