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Incentives to Motivate

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  • Kvaløy, Ola

    ()
    (UiS)

  • Schöttner, Anja

    ()
    (University of Bonn)

Abstract

We present a model in which a motivator can take costly actions - or what we call motivational effort - in order to reduce the effort costs of a worker, and analyze the optimal combination of motivational effort and monetary incentives. We distinguish two cases. First, the firm owner chooses the intensity of motivation and bears the motivational costs. Second, another agent of the firm chooses the motivational actions and incurs the associated costs. In the latter case, the firm must not only incentivize the worker to work hard, but also the motivator to motivate the worker. We characterize and discuss the conditions under which monetary incentives and motivational effort are substitutes or complements, and show that motivational effort may exceed the efficient level.

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Bibliographic Info

Paper provided by University of Stavanger in its series UiS Working Papers in Economics and Finance with number 2012/15.

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Length: 47 pages
Date of creation: 17 Jul 2012
Date of revision:
Handle: RePEc:hhs:stavef:2012_015

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Postal: University of Stavanger, NO-4036 Stavanger, Norway
Web page: http://www.uis.no/research/economics_and_finance
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Keywords: Incentives; Motivate;

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  1. Dur, Robert & Non, Arjan & Roelfsema, Hein, 2010. "Reciprocity and incentive pay in the workplace," Journal of Economic Psychology, Elsevier, Elsevier, vol. 31(4), pages 676-686, August.
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  3. Dur, Robert & Sol, Joeri, 2009. "Social Interaction, Co-Worker Altruism, and Incentives," IZA Discussion Papers 4532, Institute for the Study of Labor (IZA).
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  7. Gürerk, Özgür & Irlenbusch, Bernd & Rockenbach, Bettina, 2009. "Motivating teammates: The leader's choice between positive and negative incentives," Journal of Economic Psychology, Elsevier, Elsevier, vol. 30(4), pages 591-607, August.
  8. Tim Besley & Maitreesh Ghatak, 2005. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 928, London School of Economics and Political Science, LSE Library.
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  14. Hermalin, Benjamin E., 2007. "Leading for the long term," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 62(1), pages 1-19, January.
  15. Tore Ellingsen & Magnus Johannesson, 2008. "Pride and Prejudice: The Human Side of Incentive Theory," American Economic Review, American Economic Association, American Economic Association, vol. 98(3), pages 990-1008, June.
  16. Lazear, Edward P., 2012. "Leadership: A personnel economics approach," Labour Economics, Elsevier, Elsevier, vol. 19(1), pages 92-101.
  17. Baldauf, Artur & Cravens, David W. & Grant, Kegn, 2002. "Consequences of sales management control in field sales organizations: a cross-national perspective," International Business Review, Elsevier, Elsevier, vol. 11(5), pages 577-609, October.
  18. Hermalin, Benjamin E, 1998. "Toward an Economic Theory of Leadership: Leading by Example," American Economic Review, American Economic Association, American Economic Association, vol. 88(5), pages 1188-1206, December.
  19. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(3), pages 715-753, August.
  20. Edward P. Lazear, 2010. "Leadership: A Personnel Economics Approach," NBER Working Papers 15918, National Bureau of Economic Research, Inc.
  21. Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 15(5), pages 589-611, December.
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