UiS Working Papers in Economics and Finance
Incentives to Motivate
() and Anja Sch÷ttner
Abstract: 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.
Keywords: Incentives; Motivate; (follow links to similar papers)
JEL-Codes: A10; (follow links to similar papers)
47 pages, July 17, 2012
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