Incentives to motivate

We present a model in which a motivator can take costly actions -- or what we call motivational effort -- in order to reduce the effort costs of a worker, and analyze the optimal combination of motivational effort and monetary incentives. We distinguish two cases. First, the firm owner chooses the i...

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Bibliographic Details
Published in:Journal of economic behavior & organization 2015-08, Vol.116, p.26-42
Main Authors: Kvaløy, Ola, Schöttner, Anja
Format: Article
Language:English
Subjects:
Cost reduction
Economic analysis
Economic behaviour
Economic incentives
Economic models
Economic theory
Firm theory
Monetary incentives
Motivation
Studies
Workers
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Summary:We present a model in which a motivator can take costly actions -- or what we call motivational effort -- in order to reduce the effort costs of a worker, and analyze the optimal combination of motivational effort and monetary incentives. We distinguish two cases. First, the firm owner chooses the intensity of motivation and bears the motivational costs. Second, another agent of the firm chooses the motivational actions and incurs the associated costs. In the latter case, the firm must not only incentivize the worker to work hard, but also the motivator to motivate the worker. We characterize and discuss the conditions under which monetary incentives and motivational effort are substitutes or complements, and show that motivational effort may exceed the efficient level.
ISSN:0167-2681
1879-1751
DOI:10.1016/j.jebo.2015.03.012