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Intrinsically Motivated Agents: Blessing or Curse for Firms?

Ester Manna

2013 Papers from Job Market Papers

Abstract: I investigate whether the presence of intrinsically motivated agents benefits firms in a competitive environment. I find that firms may obtain higher profits by hiring self-interested agents than by hiring motivated agents. This is because the agents' intrinsic motivation has counteracting effects on the profits obtained by the firms. On the one hand, motivation has a positive impact on the profits due to a reduction of wages. Motivated employees provide a given level of quality for a lower wage. On the other hand, motivation has a negative impact on each firm's profits. The agents' intrinsic motivation has a positive impact on the quality offered by the firms. With higher quality, the degree of differentiation of the products is relatively less important, increasing competition and reducing prices. Firms find themselves trapped in a prisoner's dilemma in which the strategy of hiring self-interested agents is strictly dominated by that of hiring motivated agents. Hence, the very presence of motivated agents may hurt firms.

JEL-codes: D03 D21 L13 (search for similar items in EconPapers)
Date: 2013-10-08
New Economics Papers: this item is included in nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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