 Motivation through goal settingJournal of Economic Psychology, 2012, vol. 33, issue 6, 1223-1239 Abstract: We study a principal agent model where agents derive a sense of pride from accomplishing production goals. As in classical models, the principal offers a pay-per-performance wage to the agent, determining the agent’s extrinsic incentives. However, in our model, the principal uses goal setting policies as a tool to manage agents’ intrinsic motivation. To capture the idea that different agents respond differently to different goals we introduce the concept of personal standards which determine what becomes challenging and rewarding to them, and hence the intensity of their intrinsic motivation to achieve goals. We show that, at the optimal contract, the agents’ production, as well as the goals set by the principal, increase with the agents’ personal standards. Moreover, we show that an intrinsically motivated agent gets higher surplus than an agent with no intrinsic motivation in the form of informational rents but an agent with a mid-ranged standard (and hence productivity) could end up being the one most satisfied. Therefore, our model can be helpful to explain some empirical findings in the literature of job satisfaction such as the so called “paradox of happiness”. Keywords: Intrinsic motivation; Goal-setting; Reference dependent preferences; Job satisfaction (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:33:y:2012:i:6:p:1223-1239 DOI: 10.1016/j.joep.2012.08.010 Access Statistics for this article Journal of Economic Psychology is currently edited by G. Antonides and D. Read More articles in Journal of Economic Psychology from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.