Intinsically Motivated Agents: Blessing or Curse for Firms ?
AbstractI investigate whether the presence of intrinsically motivated agents benefits firms in a competitiveenvironment. I find that firms may obtain higher profits by hiring self-interested agents than byhiring motivated agents. This is because the agents’ intrinsic motivation has counteracting effectson the profits obtained by the firms. On the one hand, motivation has a positive impact on theprofits due to a reduction of wages. Motivated employees provide a given level of quality for a lowerwage. On the other hand, motivation has a negative impact on each firm’s profits. The agents’intrinsic motivation has a positive impact on the quality offered by the firms. With higher quality,the degree of differentiation of the products is relatively less important, increasing competition andreducing prices. Firms find themselves trapped in a prisoner’s dilemma in which the strategy ofhiring self-interested agents is strictly dominated by that of hiring motivated agents. Hence, thevery presence of motivated agents may hurt firms.
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers ECARES with number ECARES 2013-37.
Length: 24 p.
Date of creation: Oct 2013
Date of revision:
Publication status: Published by:
spatial competition; intrinsically motivated agents; prisoner's dilemma;
Other versions of this item:
- Ester Manna, 2013. "Intrinsically Motivated Agents: Blessing or Curse for Firms?," 2013 Papers pma1910, Job Market Papers.
- D30 - Microeconomics - - Distribution - - - General
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-30 (All new papers)
- NEP-BEC-2014-03-30 (Business Economics)
- NEP-HRM-2014-03-30 (Human Capital & Human Resource Management)
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