Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93477
Authors: 
Kvaløy, Ola
Schöttner, Anja
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4656
Abstract: 
We present a model in which a motivator can take costly actions - or what we call motivational effort - in order to reduce the effort costs of a worker, and analyze the optimal combination of motivational effort and monetary incentives. We distinguish two cases. First, the firm owner chooses the intensity of motivation and bears the motivational costs. Second, another agent of the firm chooses the motivational actions and incurs the associated costs. In the latter case, the firm must not only incentivize the worker to work hard, but also the motivator to motivate the worker. We characterize and discuss the conditions under which monetary incentives and motivational effort are substitutes or complements, and show that motivational effort may exceed the efficient level.
Subjects: 
incentives to motivate
JEL: 
D86
J33
M52
Document Type: 
Working Paper

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