Incentives for Optimal Allocation of HIV Prevention Resources

The thesis consists of three main chapters on optimal incentives for a multi-level allocation process of HIV/AIDS prevention funds. HIV/AIDS prevention funds often traverse several levels of distribution. At each level, equity-based heuristics are often used by decision-makers that may lead to sub-optimal allocation. Mathematical programming models may help to allocate prevention funds optimally. Thus, incentives could be given to decision-makers to encourage optimal allocation. Chapter 4 investigates the impact of incentives by developing a model in which an upper-level decision-maker (UD) allocates funds to a single lower-level decision-maker (LD) who then distributes funds to local programs. The UD makes use of an incentive scheme to encourage a LD to allocate optimally. The results demonstrate that under certain conditions an incentive may help the upper-level to encourage optimal allocation at the lower-level. Chapter 5 extends the model developed in Chapter 4 to incorporate information asymmetry. The information about the total infections prevented per dollar and preferences of the LD regarding equity-based allocation is known at the lower-level, but unknown at the upper-level. We examine conditions when loss of efficiency is higher or zero at the upper-level. Chapter 6 evaluates the impact of two types of incentives between and within the two LDs. The UD sets the level of incentives and then the two LDs sets the fraction of the funds to be reserved for proportional allocation and the amounts allocated to the lower-level programs. We analyze each decision-makers’ behaviour at the equilibrium when either or both incentive schemes are incorporated