The Crowding-Out of Work Ethics
AbstractThis paper analyses optimal contracts in a principal-agent model where the agent is intrinsically motivated at the outset and there is an endogenous relationship between the structure of incentive payments and intrinsic motivation (crowding effects). The analysis shows that crowding effects have implications for the optimal contract and that under some conditions the principal can do better without implementing any economic incentives. Furthermore, it is shown that when high-powered incentives diminish intrinsic motivation (crowding-out) the first-best solution in a principal-agent framework is unattainable.
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Bibliographic InfoPaper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2001:4.
Length: 17 pages
Date of creation: 30 Jun 2009
Date of revision:
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Agency theory; intrinsic motivation; crowding effects;
Find related papers by JEL classification:
- J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-11 (All new papers)
- NEP-CBE-2009-07-11 (Cognitive & Behavioural Economics)
- NEP-CTA-2009-07-11 (Contract Theory & Applications)
- NEP-LAB-2009-07-11 (Labour Economics)
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