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Altruism and Career Concerns

  • Shchetinin, Oleg

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

The paper studies the impact of altruism on Agent’s motivation in the career concerns model. I show that career concerns incentive is lessened by altruism. As a consequence, altruism can decrease effort, though conventional wisdom suggests that effort should always be higher for the more altruistic worker. This means that not only intrinsic motivation can be crowded by extrinsic incentives; crowding effect can go in the opposite direction as well. This emphasizes a new channel of interaction between intrinsic and extrinsic motivation. The paper also studies the effect of altruism on wage. Interestingly, the model provides an example of winner’s blessing and shows that ambitions can hinder altruistic relationship. The model can be naturally applied to the workplace relationship and to the local public good provision.

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File URL: http://hdl.handle.net/2077/21818
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 427.

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Length: 40 pages
Date of creation: 22 Jan 2010
Date of revision:
Handle: RePEc:hhs:gunwpe:0427
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/

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  1. Amihai Glazer, 2008. "Optimal Contracts When a Worker Envies His Boss," Journal of Law, Economics and Organization, Oxford University Press, vol. 24(1), pages 120-137, May.
  2. Mathias Dewatripont & Patrick Bolton, 2005. "Contract theory," ULB Institutional Repository 2013/9543, ULB -- Universite Libre de Bruxelles.
  3. Hideshi Itoh, 2004. "Moral Hazard and Other-Regarding Preferences," The Japanese Economic Review, Japanese Economic Association, vol. 55(1), pages 18-45.
  4. Bartling, Björn & Siemens, Ferdinand von, 2006. "The Intensity of Incentives in Firms and Markets: Moral Hazard with Envious Agents," Discussion Papers in Economics 913, University of Munich, Department of Economics.
  5. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
  6. Dirk Sliwka, 2007. "Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes," American Economic Review, American Economic Association, vol. 97(3), pages 999-1012, June.
  7. repec:dgr:uvatin:20040046 is not listed on IDEAS
  8. 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.
  9. Armin Falk & Michael Kosfeld, . "The Hidden Costs of Control," IEW - Working Papers 250, Institute for Empirical Research in Economics - University of Zurich.
  10. Christian Grund & Dirk Sliwka, 2005. "Envy and Compassion in Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 187-207, 03.
  11. Bengt Holmstrom, 1999. "Managerial Incentive Problems: A Dynamic Perspective," NBER Working Papers 6875, National Bureau of Economic Research, Inc.
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