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 Department of Economics, University of Kent in its series Studies in Economics with number 0102.
Date of creation: Jan 2001
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Find related papers by JEL classification:
- L0 - Industrial Organization - - General
- J0 - Labor and Demographic Economics - - General
- D2 - Microeconomics - - Production and Organizations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-04-21 (All new papers)
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