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Job mission as a substitute for monetary incentives: experimental evidence

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  • Lea Cassar

Abstract

Are monetary and non-monetary incentives used as substitutes in motivating effort? I address this question in a laboratory experiment in which the choice of the job charac- teristics (i.e., the mission) is part of the compensation package that principals can use to influence agents' effort. Principals offer contracts that specify a piece rate and a charity - which can be either the preferred charity of the agent, or the one of the principal. The agents then exert a level of effort that generates a profit to the principal and a dona- tion to the specified charity. My results show that the agents exert more effort than the level that maximizes their own pecuniary payoff in order to benefit the charity, especially their preferred one. The principals take advantage of this intrinsic motivation by offering lower piece rates and by using the choice of the charity as a substitute to motivate effort. However, I also find that because of fairness considerations, the majority of principals are reluctant to lower the piece rate below a fair threshold, making the substitution between monetary and non-monetary incentives imperfect. These findings have implications for the design of incentives in mission-oriented organizations and contribute to our understanding of job satisfaction and wage differentials across organizations and sectors.

Suggested Citation

  • Lea Cassar, 2014. "Job mission as a substitute for monetary incentives: experimental evidence," ECON - Working Papers 177, Department of Economics - University of Zurich.
  • Handle: RePEc:zur:econwp:177
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    File URL: http://www.econ.uzh.ch/static/wp/econwp177.pdf
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    References listed on IDEAS

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    1. repec:eee:eecrev:v:98:y:2017:i:c:p:189-198 is not listed on IDEAS
    2. Non, Arjan & Rohde, Ingrid & de Grip, Andries & Dohmen, Thomas, 2019. "Mission of the company, prosocial attitudes and job preferences: A discrete choice experiment," ROA Research Memorandum 006, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    3. Dur, Robert & van Lent, Max, 2018. "Serving the public interest in several ways: Theory and empirics," Labour Economics, Elsevier, vol. 51(C), pages 13-24.
    4. Tobias Regner & Hannes Koppel, 2015. "What drives motivated agents? The 'right' mission or sharing it with the principal," Jena Economic Research Papers 2015-022, Friedrich-Schiller-University Jena.
    5. Lea Cassar & Stephan Meier, 2017. "Intentions for Doing Good Matter for Doing Well: The (Negative) Signaling Value of Prosocial Incentives," NBER Working Papers 24109, National Bureau of Economic Research, Inc.
    6. Englmaier, Florian & Schüßler, Katharina, 2015. "Complementarities of HRM Practices," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 503, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    7. Florian Englmaier & Katharina Schüßler, 2015. "Complementarities of HRM Practices - A Case for Employing Multiple Methods and Integrating Multiple Fields," CESifo Working Paper Series 5249, CESifo Group Munich.
    8. Kajackaite, Agne & Sliwka, Dirk, 2018. "Prosocial Managers, Employee Motivation, and the Creation of Shareholder Value," IZA Discussion Papers 11789, Institute of Labor Economics (IZA).
    9. Daniel Jones & Mirco Tonin & Michael Vlassopoulos, 2018. "Paying for what kind of Performance? Performance Pay and Multitasking in Mission-Oriented Jobs," CESifo Working Paper Series 7156, CESifo Group Munich.
    10. Jeworrek, Sabrina & Mertins, Vanessa, 2019. "Mission, motivation, and the active decision to work for a social cause," IWH Discussion Papers 10/2019, Halle Institute for Economic Research (IWH).
    11. Daniel Schwartz & Elizabeth A. Keenan & Alex Imas & Ayelet Gneezy, 2017. "Opting-in to Prosocial Incentives," CESifo Working Paper Series 6840, CESifo Group Munich.
    12. Cassar, Lea & Meier, Stephan, 2017. "Intentions for Doing Good Matter for Doing Well: The (Negative) Signaling Value of Prosocial Incentives," IZA Discussion Papers 11203, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Mission; intrinsic motivation; incentives; experiment;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M55 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Contracting Devices

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