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Goal Setting and Monetary Incentives: When Large Stakes Are Not Enough

Joaquín Gómez-Miñambres (minambre@chapman.edu), Brice Corgnet and Roberto Hernan Gonzalez
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Joaquín Gómez-Miñambres: Economic Science Institute, Chapman University

Working Papers from Chapman University, Economic Science Institute

Abstract: The aim of this paper is to test the effectiveness of wage-irrelevant goal setting policies in a laboratory environment. In our design, managers can assign a goal to their workers by setting a certain level of performance on the work task. To establish our theoretical conjectures we develop a model where assigned goals act as reference points to workers’ intrinsic motivation, creating a sense of gain when attained and a sense of loss when not attained. Consistent with our theoretical framework, we find evidence that managers set goals that are challenging but attainable for an average-ability worker. Workers respond to these goals by increasing effort, performance and by decreasing on-the-job leisure activities with respect to the no-goal setting baseline. We study the interaction between goal setting and monetary rewards by considering different values for the monetary incentives involved in completing the task. Interestingly, we find that goal setting is especially effective when monetary incentives are strong. These results suggest that goal setting may foster workers’ intrinsic motivation and increase their level of performance beyond what is achieved using solely monetary incentives.

Keywords: Intrinsic motivation; incentives; goal-setting; reference dependent preferences; virtual organizations. (search for similar items in EconPapers)
JEL-codes: C92 D23 M54 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2012
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-hrm and nep-lab
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Citations: View citations in EconPapers (5)

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http://www.chapman.edu/research-and-institutions/e ... etary-incentives.pdf

Related works:
Journal Article: Goal Setting and Monetary Incentives: When Large Stakes Are Not Enough (2015) Downloads
Working Paper: Goal Setting and Monetary Incentives: When Large Stakes Are Not Enough (2015)
Working Paper: Goal Setting and Monetary Incentives: When Large Stakes Are Not Enough (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:12-24

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