In this work, we aim to analyze a clinical study sponsor’s decisions regarding monetary payments to participants and compensation for providers (investigators and coordinators) for their efforts to improve participant retention in the study. To this end, we first consider a centralized model where the sponsor decides the monetary payments to participants and the providers’ efforts. We then identify the optimal contracts for the providers under the two decentralized team structures: the sponsor-investigator (SI) model and the outsourcing (OM) model. We further analyze three widely adopted compensation contracts for the providers: fixed (FC), linear (LC), and conditional linear (CLC) given a decentralized structure. Our theoretical analysis shows that the expected retention cost with optimal contracts under decentralized structures is at most 40% higher than that under the centralized model. However, in practical instances, this cost increase is, at the most, 8% on average. A comparison of the FC, LC, and CLC contracts reveals that it is sufficient for the sponsor to choose between the FC and the LC contracts under the SI model, whereas under the OM model, there exist cases where the sponsor is better off adopting the CLC contract. Furthermore, the sponsor’s expected retention cost when choosing the best of the three contracts is at most 6% (10%) higher on average relative to that for the optimal compensation contract under the SI (OM) model. Given a decentralized structure, we also identify cases where the optimal contract offers significant benefit over the three contracts observed in practice. This paper was accepted by Elena Katok, operations management. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.02973 .
Song et al. (2026) studied this question.