This study analyzes the determinants of the choice of remuneration system and examines their influence on the economic performance of fisheries. The purse seine fisheries in Khanh Hoa province, Vietnam, are used as the study case, with data collected from 158 fishing households in 2005 and 2008. The principal-agent framework and the propensity score-matching technique are employed for the analysis. We demonstrate that insurance incentive-based problems are the rationale for the coexistence of share contracts and flat-wage contracts, even though share contracts bring greater economic benefit to both vessel owners and crew members. Crew members are found to be risk averse. Crew size and residence are important factors that influence the choice of contracts. Compared with flat-wage contracts, small share-contracted vessels are more efficient in managing the operating costs, while large ones are more efficient in yielding a high catch.

JEL Classification Codes: D01, M41, Q22