The Institutional Analysis and Development (IAD) framework enables an analyst to break up examinations of incentive structures into separate components as well as to examine linkages among them. In Chapters 4 and 5 , we examined the linkages among operational action situations within the Octangle and focused particularly on the bargaining linkages between a donor and a recipient. In Chapter 6 , we examined how the diverse modalities of aid produce diverse sets of incentives leading to both positive and negative outcomes. We noted that it is possible to examine three different yet interconnected analytical levels: the operational, policy, and constitutional levels of analysis.
A major contribution of an IAD framework-guided analysis is that the observed results at the operational level of analysis in the field can be linked to decision-making processes at the collective-choice and constitutional levels in the respective governments' national capitals. In other words, to fix an undesired outcome in a field activity may require adjustments in the rules-in-use or other contextual factors at a collective-choice or constitutional level in the decision-making hierarchy. These rule adjustments are often related to the decision-making process inside the development agency's headquarters, but may also involve decisions by other actors who have the authority to limit the powers of the aid agency.
More fundamentally, to fix such problems, decision makers must first be able to diagnose what to fix and then know how to fix it in a reasonable way. To develop that kind of knowledge requires an active learning process about field activities and about institutional responses to undesired outcomes at headquarters and in the field. We argue that incentives for an aid agency's staff to learn about sustainability of field activities is one of the most fundamental factors in that agency's quest for sustainable development outcomes. We suggest that it is essential for agencies to base their decisions about development cooperation programs on an ongoing learning and adjustment process. For this to happen, it is paramount that the incentives of agency staff are aligned with the goal of strengthening both individual and organizational learning processes. The purpose of this chapter is to assess these incentives and their alignment.
As a donor trying to help the population of a recipient country, an aid organization's staff members face a diverse set of multilevel action situations. First, they confront the