Why do people work? Economic theory generally, and the principal-agent model specifically, emphasize the role of material incentives. But many academics, for example, work diligently year after year for a nearly fixed real salary, continuing to work hard as they approach retirement, although financial incentives are usually absent. We will argue that while economists have been right to focus on incentives, they have been wrong to focus so exclusively on material incentives. While workers appreciate monetary rewards, they also get utility from what (they believe that) others think about them. We lay out a body of evidence that, taken as a whole, makes a strong case that respect matters in the workplace, above and beyond material rewards. We discuss evidence that workers respond to attention, symbolic rewards, and trust -- and even that material incentives in some cases lead to less effort. Finally, we argue that many of these observations can be captured in a standard principal-agent model, once the principals and the agents are assumed to care about respect or esteem as well as money.
Volume (Year): 21 (2007)
Issue (Month): 4 (Fall)
|Contact details of provider:|| Web page: https://www.aeaweb.org/jep/|
More information through EDIRC
|Order Information:||Web: https://www.aeaweb.org/subscribe.html|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Daniel Nettle & Gilbert Roberts & Melissa Bateson, 2006. "Cues of being watched enhance cooperation in a real-world setting," Natural Field Experiments 00214, The Field Experiments Website.
- Michael Kosfeld & Armin Falk, 2006.
"The Hidden Costs of Control,"
American Economic Review,
American Economic Association, vol. 96(5), pages 1611-1630, December.
- Fehr, Ernst & Klein, Alexander & Schmidt, Klaus M., 2007.
"Fairness and contract design,"
Munich Reprints in Economics
20618, University of Munich, Department of Economics.
- Fehr, Ernst & Klein, Alexander & Schmidt, Klaus M., 2005. "Fairness and Contract Design," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 67, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Fershtman, Chaim & Weiss, Yoram, 1993.
"Social Status, Culture and Economic Performance,"
Royal Economic Society, vol. 103(419), pages 946-59, July.
- Chaim Fershtman & Yoram Weiss, 1991. "Social Status, Culture and Economic Performance," Discussion Papers 1007, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Fershtman, C. & Weiss, Y., 1991. "Social Status , Culture and Economic Performance," Papers 32-91, Tel Aviv.
- Hollander, Heinz, 1990. "A Social Exchange Approach to Voluntary Cooperation," American Economic Review, American Economic Association, vol. 80(5), pages 1157-67, December.
- Englmaier, Florian & Wambach, Achim, 2005.
"Optimal Incentive Contracts under Inequity Aversion,"
IZA Discussion Papers
1643, Institute for the Study of Labor (IZA).
- Englmaier, Florian & Wambach, Achim, 2010. "Optimal incentive contracts under inequity aversion," Games and Economic Behavior, Elsevier, vol. 69(2), pages 312-328, July.
- Englmaier, Florian & Wambach, Achim, 2010. "Optimal incentive contracts under inequity aversion," Munich Reprints in Economics 22027, University of Munich, Department of Economics.
- Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
- Fershtman, C. & Weiss,Y., 1995.
"Social Rewards, Externalities and Stable Preferences,"
32-95, Tel Aviv.
- Fershtman, Chaim & Weiss, Yoram, 1998. "Social rewards, externalities and stable preferences," Journal of Public Economics, Elsevier, vol. 70(1), pages 53-73, October.
- Fershtman, C. & Weiss, Y., 1996. "Social Rewards, Externalities and Stable preferences," Discussion Paper 1996-28, Tilburg University, Center for Economic Research.
- Fershtman, C. & Weiss, Y., 1996. "Social Rewards Externalities and Stable Preferences," Papers 17-96, Tel Aviv.
- Aldo Rustichini & Uri Gneezy, 2000.
"A fine is a price,"
Natural Field Experiments
00258, The Field Experiments Website.
- Ernst Fehr & John A. List, 2004.
"The Hidden Costs and Returns of Incentives-Trust and Trustworthiness Among CEOs,"
Journal of the European Economic Association,
MIT Press, vol. 2(5), pages 743-771, 09.
- Ernst Fehr & John List, 2004. "The hidden costs and returns of incentives - trust and trustworthiness among ceos," Artefactual Field Experiments 00044, The Field Experiments Website.
- E. Fehr & John A. List, . "The Hidden Costs and Returns of Incentives - Trust and Trustworthiness among CEOs," IEW - Working Papers 134, Institute for Empirical Research in Economics - University of Zurich.
- Ernst Fehr & John A. List, 2004. "THE HIDDEN COSTS AND RETURNS OF INCENTIVES — TRUST AND TRUSTWORTHINESS AMONG CEOs," Labor and Demography 0409012, EconWPA.
- Auriol, Emmanuelle & Renault, Régis, 2000.
IDEI Working Papers
105, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2001.
- Gary Charness, 2004.
"Attribution and Reciprocity in an Experimental Labor Market,"
Journal of Labor Economics,
University of Chicago Press, vol. 22(3), pages 665-688, July.
- Charness, Gary B, 2004. "Attribution And Reciprocity In An Experimental Labor Market," University of California at Santa Barbara, Economics Working Paper Series qt8rp6b18c, Department of Economics, UC Santa Barbara.
- Roland Benabou & Jean Tirole, 2003.
"Intrinsic and Extrinsic Motivation,"
Review of Economic Studies,
Wiley Blackwell, vol. 70(3), pages 489-520, 07.
- Costrell, Robert M, 1994. "A Simple Model of Educational Standards," American Economic Review, American Economic Association, vol. 84(4), pages 956-71, September.
- Hoffman Elizabeth & McCabe Kevin & Shachat Keith & Smith Vernon, 1994. "Preferences, Property Rights, and Anonymity in Bargaining Games," Games and Economic Behavior, Elsevier, vol. 7(3), pages 346-380, November.
- Harbaugh, William T., 1998. "What do donations buy?: A model of philanthropy based on prestige and warm glow," Journal of Public Economics, Elsevier, vol. 67(2), pages 269-284, February.
- Besley, Timothy J. & Ghatak, Maitreesh, 2004.
"Competition and Incentives with Motivated Agents,"
CEPR Discussion Papers
4641, C.E.P.R. Discussion Papers.
- Timothy Besley & Maitreesh Ghatak, 2003. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics 2202, London School of Economics and Political Science, LSE Library.
- Tim Besley & Maitreesh Ghatak, 2005. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics 928, London School of Economics and Political Science, LSE Library.
- repec:feb:natura:0059 is not listed on IDEAS
- Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
- Ernst Fehr & Bettina Rockenbach, 2003. "Detrimental effects of sanctions on human altruism," Microeconomics 0305007, EconWPA.
- Fershtman, Chaim & Hvide, Hans K & Weiss, Yoram, 2003. "Cultural Diversity, Status Concerns and the Organization of Work," CEPR Discussion Papers 3982, C.E.P.R. Discussion Papers.
- Pradeep Dubey & John Geanakoplos, 2004. "Grading Exams: 100, 99, ..., 1 or A, B, C? Incentives in Games of Status," Cowles Foundation Discussion Papers 1467, Cowles Foundation for Research in Economics, Yale University.
- Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:21:y:2007:i:4:p:135-150. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)or (Michael P. Albert)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.