Work for Image and Work for Pay

Roberta Dessi and Aldo Rustichini

No 683, IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse

Abstract: Standard economic models with complete information predict a positive, monotonic relationship between pay and performance. This prediction does not always hold in experimental tests: offering a small payment may result in lower performance than not offering any pay- ment. We test experimentally two main explanations that have been put forward for this result: the "incomplete contract" hypothesis views the payment rule as a signal given to subjects on purpose of the activity. The "informed principal" hypothesis views it as a signal concerning the characteristics of the agent or of the task. The incomplete contract view appears to offer the best overall explanation for our results. We also find that high-powered monetary incentives do not "crowd out" intrinsic motivation, but may elicit "too much" effort when intrinsic motivation is very high.

Date: 2011-09
New Economics Papers: this item is included in nep-cbe, nep-cta, nep-exp, nep-hrm, nep-lab, nep-lma and nep-mic
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Citations: View citations in EconPapers (2)

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