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Contracts and Motivations. The Case of Open Source

  • Marcello Basili

    ()

  • Antonio Nicita

    ()

  • Maria Alessandra Rossi

    ()

The literature on Open Source phenomenon has revealed the crucial role played by both intrinsic and extrinsic motivations. However an analysis attempting to formally explore this interplay is still missing. In this paper, we try to fill the gap by introducing intrinsic motivations in standard principal-agent model, focusing on the case of Open Source Software (OSS). We show that, if developers’ intrinsic motivation is sufficiently high, paying developers to work on OSS projects allows the firm to induce a desired level of workers’ effort at a lower cost compared to the standard case of monetary incentives and sanctions coupled with costly monitoring.

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Paper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 544.

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Date of creation: Oct 2008
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Handle: RePEc:usi:wpaper:544
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  1. Jürgen Bitzer & Wolfram Schrettl & Philipp J.H. Schröder, 2005. "Intrinsic Motivation in Open Source Software Development," Development and Comp Systems 0505007, EconWPA.
  2. Marcello Basili & Maurizio Franzini, 2009. "Cooperation, Reciprocity and Self-esteem: A Theoretical Approach," Chapters, in: The Economics of Ethics and the Ethics of Economics, chapter 11 Edward Elgar.
  3. Roland Bénabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 489-520.
  4. Stephen M. Maurer & Suzanne Scotchmer, 2006. "Open Source Software: The New Intellectual Property Paradigm," NBER Working Papers 12148, National Bureau of Economic Research, Inc.
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