Regardless of how you feel about the war, can’t we all agree that General Petraeus has a terrible incentive problem? The Army culture dictates against saying you can’t accomplish your mission, and no general wants to be remembered as the person who lost the war. As a result, his incentive is to tout our “progress” rather than answering the real question, which is whether the expected utility of staying in Iraq going forward is greater than the expected utility of withdrawing. And on top of all that, Petraeus allegedly wants to run for president in the future. It’s no wonder the American people weren’t confident that he would give an objective report.

Economists out there — how could we have created better incentives? The example I’m thinking about is collaborative divorce, which attempts to eliminate the perverse incentives of divorce lawyers, who make more money if divorces turn ugly and go to court. (I actually heard about this on This American Life.) In collaborative divorce, the lawyer who represents you in the negotiation process is actually prevented from representing you in court. Thus, their incentive is to resolve problems rather than worsening them.

Along those lines, should Petraeus have had to resign after delivering his report? Should we tie future bonuses or promotion to the eventual outcome? Or what?