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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol, Emmanuelle / Brunner, Johann / Fleck, Robert / Mastrobuoni, Giovanni / Mendola, Mariapia / Requate, Till / de Vries, Frans / Zulehner, Christine

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Volume 18, Issue 1

Issues

Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

Pay for Performance with Motivated Employees

Claudia Cerrone
  • Corresponding author
  • Max Planck Institute for Research on Collective Goods, Kurt-Schumacher-Str. 10, 53113 Bonn, Germany
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/ Ester Manna
Published Online: 2018-01-23 | DOI: https://doi.org/10.1515/bejeap-2017-0190

Abstract

Heterogeneity in intrinsic motivation affects the optimal contract offered to employees in teams. Under individual incentives, the effort exerted by both motivated and selfish employees is distorted. This distortion is mitigated if employees receive a wage based on team performance. As a result, the principal prefers to use team incentives, while motivated employees are better off with individual incentives.

Keywords: adverse selection; intrinsic motivation; individual and team incentives

JEL Classification: D03; D82; D86

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About the article

Published Online: 2018-01-23


Funding : Generalitat de Catalunya, 10.13039/501100002809, Grant Number: 2014SGR493. Ministerio de Economia y Competitividad and Fondo Europeo de Desarrollo Regional, Grant Number: ECO2015-66701-R


Citation Information: The B.E. Journal of Economic Analysis & Policy, Volume 18, Issue 1, 20170190, ISSN (Online) 1935-1682, DOI: https://doi.org/10.1515/bejeap-2017-0190.

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