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Managing the reputation of an award to motivate performance

Author

Listed:
  • C. Gavrila

    ()

  • J.P. Caulkins

    ()

  • G. Feichtinger

    ()

  • G. Tragler

    ()

  • R.F. Hartl

    ()

Abstract

Managers wish to motivate workers to exert effort. There is large literature on the use of wages and monetary incentives for this purpose, but in practice the “honor” or “prestige” of an award can be a significant motivator as well, unless the award is given so often that its prestige is diluted. The model here focuses on management of the reputation of an award that may or may not have a fixed monetary component. The model is an optimal dynamic control model, so its solution suggests how to manage the award over time. The analysis is interesting because of a “false” steady state that is adjacent to but outside the admissible region and which otherwise has the qualitative properties of a steady state; there are (infinitely many) trajectories converging to it and (infinitely many) trajectories starting arbitrarily close to it. For all initial conditions there are infinitely many candidates for the optimal solution that cannot be evaluated in the standard way. We resolve that problem by proving a new proposition concerning the value of the utility functional when the limit of the Hamiltonian is non-zero. Managerial implications are derived. Copyright Springer-Verlag 2005

Suggested Citation

  • C. Gavrila & J.P. Caulkins & G. Feichtinger & G. Tragler & R.F. Hartl, 2005. "Managing the reputation of an award to motivate performance," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 61(1), pages 1-22, March.
  • Handle: RePEc:spr:mathme:v:61:y:2005:i:1:p:1-22
    DOI: 10.1007/s001860400400
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    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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    Cited by:

    1. Bruno S. Frey & Susanne Neckermann, 2008. "Awards in Economics - Towards a New Field of Inquiry," CREMA Working Paper Series 2008-33, Center for Research in Economics, Management and the Arts (CREMA).
    2. Jana Gallus & Bruno S. Frey, 2016. "Awards: A strategic management perspective," Strategic Management Journal, Wiley Blackwell, vol. 37(8), pages 1699-1714, August.
    3. Bruno S. Frey & Susanne Neckermann, 2013. "Awards play an important role," Chapters,in: Constitutional Economics and Public Institutions, chapter 17, pages 313-321 Edward Elgar Publishing.
    4. Ho Fai Chan & Bruno S. Frey & Jana Gallus & Benno Torgler, 2013. "Does the John Bates Clark Medal boost subsequent productivity and citation success?," ECON - Working Papers 111, Department of Economics - University of Zurich.
    5. Susanne Neckermann & Bruno S. Frey, 2008. "Awards as Incentives," IEW - Working Papers 334, Institute for Empirical Research in Economics - University of Zurich.
    6. Neckermann, Susanne & Cueni, Reto & Frey, Bruno S., 2014. "Awards at work," Labour Economics, Elsevier, vol. 31(C), pages 205-217.
    7. Bruno S. Frey & Susanne Neckermann, 2008. "Academics Appreciate Awards. A New Aspect of Incentives in Research," CREMA Working Paper Series 2008-32, Center for Research in Economics, Management and the Arts (CREMA).
    8. Chan, Ho Fai & Frey, Bruno S. & Gallus, Jana & Torgler, Benno, 2014. "Academic honors and performance," Labour Economics, Elsevier, vol. 31(C), pages 188-204.
    9. Bruno S. Frey & Susanne Neckermann, 2013. "Prizes and awards," Chapters,in: Handbook on the Economics of Reciprocity and Social Enterprise, chapter 27, pages 271-276 Edward Elgar Publishing.
    10. Neckermann, Susanne & Frey, Bruno S., 2013. "And the winner is…? The motivating power of employee awards," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 46(C), pages 66-77.
    11. Bruno S. Frey & Susanne Neckermann, 2008. "Awards: Questioning Popular Notions," CREMA Working Paper Series 2008-14, Center for Research in Economics, Management and the Arts (CREMA).

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