Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159705
Authors: 
Barigozzi, Francesca
Burani, Nadia
Year of Publication: 
2013
Series/Report no.: 
Quaderni - Working Paper DSE 866
Abstract: 
We study the screening problem of a firm that needs to hire a worker to produce output and that observes neither the productive ability nor the intrinsic motivation of the job applicant. We completely characterize the set of optimal contracts according to whether motivation or ability is the main determinant of the worker's performance. We show that it is always in the firm's interest to hire all types of worker and to offer different contracts to different types of employees. Interestingly, when motivation is very high, incentives force the firm to pay higher informational rents, to increase effort distorsions for motivated workers, and to offer a strictly positive wage to workers enjoying a positive utility from effort provision, who thus become paid volunteers. These results suggest that, from the principal's viewpoint, very high motivation might not be a desirable worker's characteristic.
JEL: 
D82
D86
J31
M55
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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