Core Readings

Ariely, Dan., Emir Kamenica, and Dražen Prelec, (2008). "Man's search for meaning: The case of Legos," Journal of Economic Behavior & Organization, 67(3-4): 671-677.

Manipulates the perceived meaning of simple, repetitive tasks in a laboratory setting, and finds a strong influence on subjects’ labor supply. Subjects in the less meaningful conditions exhibit reservation wages that are consistently much higher than the subjects in the more meaningful conditions. 

Ariely, Dan, Anat Bracha, and Stephan Meier. 2009. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially." American Economic Review, 99(1): 544-55. 

When students are work for charity, they work much harder when others can see their actions than when others cannot see them.  This demonstrates image motivation.   The authors also show that monetary incentives ‘crowds out’ image motivation. 

Ashraf, N., Bandiera, O., & Lee, S. S. (2014). Awards unbundled: Evidence from a natural field experiment. Journal of Economic Behavior and Organization, 100, 44-63.

Ashraf et al. argue that most symbolic award programs have two effects: to give workers themselves information on their relative performance, and to give public recognition to the winners.  In their experiment Ashraf et al. show the latter effect is highly motivating for some workers, but the former is high de-motivating for less-able workers.  

Benabou, Roland, and Jean Tirole. (2006) “Incentives and Prosocial Behavior”, American Economic Review 96(5): 1652-78.   

Benabou and Tirole's seminal theoretical article shows how adding a small amount of monetary incentives can reduce job performance in settings where symbolic or image motivation play a role, 

Ellingsen, Tore and Magnus Johannesson Paying Respect Journal of Economic Perspectives Vol. 21, No. 4 (Fall, 2007), pp. 135-150 (16 pages)

In this review article, the authors draw on a large body of evidence to make the case that respect matters in the workplace, above and beyond material rewards. They show that workers respond to attention, symbolic rewards, and trust. In addition, introducing material incentives when these rewards are present can sometimes reduce effort.  The authors’ approach is an early example of behavioral agency theory in personnel economics.

Newer Resources

Intrinsic Motivation

Carpenter, Jeffrey and Erick Gong. 2016 “Motivating Agents:  How Much Does the Mission Matter?” Journal of Labor Economics 34(1) 211-236.

For the 2012 US Presidential election, students were randomly assigned to stuff envelopes for their party or the opposing party.  Matching mattered a lot for productivity.  Financial incentives mattered only for mismatched workers.

Cassar, Lea and Stephan Meier, (2017). “Intentions for Doing Good Matter for Doing Well: The (Negative) Signaling Value of Prosocial Incentives,” IZA Discussion Paper number 11203.

Shows in an experiment in collaboration with an Italian firm that monetary and prosocial incentives work very differently. While monetary incentives used instrumentally increase effort, instrumental charitable incentives backfire compared to non-instrumental incentives.  

De Rochambeau, Golvine. (2020). “Monitoring and Intrinsic Motivation: Evidence from Liberia's Trucking Firms,” working paper, University of Oslo. 

Tests whether a new monitoring technology provided at zero cost should be widely adopted and unambiguously raise workers’ effort, using a field experiment with trucking companies in Liberia. While new monitoring technologies can dramatically raise some workers’ productivity in settings where employment contracts are difficult to enforce, their use may lower the productivity of some workers - those who are intrinsically motivated to work hard.

Huffman, David and Michael Bognanno, (2018). ”High-Powered Performance Pay and Crowding out of Non-Monetary Motives,” IZA, Discussion Paper 11920.

Uses a within-subject experimental design and finds evidence that crowding out also extends to high-powered incentives, in a real work setting with paid workers. There is individual heterogeneity, however, with a minority of workers report crowding in of motivation. Thus, the impact of performance pay might depend on the mix of worker types.

Dan Kopf, (2018). “Twelve leading economists on the research that shaped our world in 2018,” Economics in 2018, Dec 28. 

In contrast to Gneezy and Rustichini's results, small financial rewards do NOT crowd out intrinsic motivation

Nikolova, Milena and Femke Cnossen. (2020) What Makes Work Meaningful and Why Economists Should Care about It  IZA discussion paper no. 13112

Using three waves of the European Working Conditions Survey, the authors show that autonomy, competence, and relatedness explain about 60 percent of the variation in reported meaningfulness of peoples’ work.  Financial factors, such as income, benefits, and performance pay, pay a less important role.  Meaningful work also predicts absenteeism, skills training, and retirement intentions. 

Beckmann, Michael, and Matthias Kräkel  2021 Empowerment, Task Commitment, and Performance Pay  Journal of Labor Economics, forthcoming.

The authors model task commitment –a key concept in social psychology-- as a boost in utility that’s achieved only if a task is successfully completed.  They also argue that employers can create task commitment by empowering workers—i.e. by giving them more decision authority about how to do the task.  This gives employers some leeway to optimally reduce financial incentives.  The authors find some support for these ideas in a large-scale linked employer-employee panel data set, especially for highly skilled workers who are in high demand.

Bandiera, Oriana, Michael Carlos Best, Adnan Qadir Khan, and Andrea Prat 2021 “The Allocation of Authority in Organizations: A Field Experiment with Bureaucrats”.  Quarterly Journal of Economics,  forthcoming.

The authors use a field experiment to study the effects of (a) financial incentives and (b) shifting authority to frontline workers (procurement officers) from their monitors.   affects performance both directly and through the response to incentives.  Simply shifting authority this way (downward in the hierarchy) raises the frontline workers’ performance by 9% without reducing quality.  In contrast, the effect of performance pay is muted.

Hedblomy, Daniel, Brent R. Hickmanz, and John A. List (2021) Toward an Understanding of Corporate Social Responsibility: Theory and Field Experimental Evidence NBER working paper no. 26222

If workers derive utility from doing a job that contributes to a  goal workers support, firms that advertise corporate social responsibility (CSR) activities could benefit financially by (a) attracting better workers and (b) motivating their existing workers more.  The authors create their own firm and designed an experiment to measure the effects of announcing their CSR commitment on both the selection and motivation of their employees.   When their firm advertised its CSR pursuits during employee recruitment, it attracted substantially more applicants, and the overall applicant pool was more productive. These increases in applicant quality were comparable to the impacts of a 36% wage increase.  Re-allocating existing employees from regular to CSR-related activities also increased their job performance substantially. 

Hussam, Reshmaan,  Erin M. Kelley, Gregory Lane and Fatima Zahra 2022 The Psychosocial Value of Employment: Evidence from a Refugee Camp American Economic Review, 112(11): 3694–3724

Employment may be important to well-being for reasons beyond its role as an income source. This paper presents a causal estimate of the psychosocial value of employment in refugee camps in Bangladesh. 745 individuals are randomly assigned to a control treatment, receiving weekly cash payments, and jobs paying the same amount of money.  The authors find that employment raises psychosocial well-being substantially more than cash alone, and 66 percent of the employed are willing to forgo cash payments to continue working temporarily for free. Despite being very poor, these refugees both experience and recognize a nonmonetary, intrinsic value of employment.

Bellet, Clément S., Jan-Emmanuel De Neve, and George Ward 2023 “Does Employee Happiness Have an Impact on Productivity?” Management Science, forthcoming

The authors use variation in telesales workers’ mood arising from visual exposure to weather—the interaction between call center architecture and outdoor weather conditions—to Demonstrate a positive effect of happiness on productivity.  Most of the effect occurs through workers converting more calls into sales, rather than making more calls per hour and or taking fewer breaks. 

Conti, Annamaria, Vansh Gupta, Jorge Guzman, and Maria P. Roche 2023,  Incentivizing Innovation in Open Source: Evidence from the GitHub Sponsors Program
NBER working paper no. #31668 

The authors show that introducing monetary rewards to motivate innovators to contribute to open-source products on GitHub.  The authors find that developers who opted into the program increased their output after the program's launch. Developers who actually received an award, however, reduced their innovative activity (as measured by new repository creation) substantially. They conclude that receiving an extrinsic reward may crowd out developers' intrinsic motivation, diverting their effort away from community and service-oriented activities on open source. 

Symbolic Rewards

Lacetera, Nicola and Mario Macis (2010).  Social image concerns and prosocial behavior: Field evidence from a nonlinear incentive scheme. Journal of Economic Behavior & Organization 76: 225–237

Shows that Italian blood donors are motivated by symbolic prizes (medals), but only if the prizes are announced in the local newspaper and awarded in a public ceremony.  Thus, social image concerns seem to be the primary drivers of awards’ effectiveness in this context. 

Kosfeld, Michael and Susanne Neckermann  2011  “Getting More Work for Nothing? Symbolic Awards and Worker Performance” AEJ: Micro 3(3): 86-99

When student workers in an international NGO were given the opportunity to earn a congratulatory card honoring the best performance in their group, mean job performance rose by about 12 percent. 

Bradler, Christiane., Robert Dur, and Susanne Neckermann, (2013). “Employee recognition and performance: A field experiment,” CESifo Working Paper Series, number 4164.

Hires more than 300 employees to work on a three-hour data-entry task, and workers unexpectedly received recognition after two hours of work.  Recognition increases subsequent performance substantially, especially when recognition is exclusively provided to the best performers. 

Gallus, Jana, (2015). “Fostering Voluntary Contributions to a Public Good A Large-Scale Natural Field Experiment at Wikipedia,” No. 2015-05. Center for Research in Economics, Management and the Arts (CREMA).     

Conducts a natural experiment at Wikipedia, which faces declining editor retention rates, particularly among newcomers. Randomizes the receipt of the award to make it orthogonal to previous performance. Awards have a sizeable effect on newcomer retention, which persists over the four quarters following the initial intervention. 

Gallus, Jana, and Bruno S. Frey, (2016). "Awards: A strategic management perspective." Strategic Management Journal, 37(8): 1699-1714.

Devlops a synthesis of the dimensions critical for successful award bestowals, and analyze under which conditions awards generate firm‐specific value that is sustained and difficult for competitors to imitate. The process of value creation and capture is contingent on the given firm's organizational characteristics and nature of production.

Frey, Bruno S, and Jana Gallus, (2016). "Honors: A rational choice analysis of award bestowals," Rationality and Society, 28(3): 255-269. 

Focuses on the givers’ side of award bestowals and analyzes the distinct purposes that such bestowals serve. Awards have the potential to raise their recipients’ intrinsic motivation, while money is more likely to crowd it out. 

Gallus, Jana, and Bruno S. Frey, (2016). "Awards as non-monetary incentives," Evidence-based HRM: a Global Forum for Empirical Scholarship, vol. 4, no. 1, pp. 81-91. Emerald Group Publishing Limited.

The paper combines a theoretical analysis with various analytical methods, including a new matching technique, randomization in the field, and the survey approach. Fings suggest that awards have the potential to substantially increase performance, yet they are less frequently used in the Swiss voluntary sector than theory suggests.

Gubler, Timothy, Ian Larkin and Lamar Pierce.  2016 “Motivational Spillovers from Awards: Crowding Out in a Multitasking Environment”  Organization Science 27(2): 233-504

While cash awards for attendance temporarily improved attendance for directly-affected workers in a  industrial laundry plant, the awards did not habituate improved attendance.  Further, the award program crowded out crowded out the internal motivation workers who previously had excellent attendance, and reduced performance on tasks not included in the award program.  The authors argue that the high-performing, intrinsically motivated workers perceived these attendance awards are unfair.

Ager, Philipp, Leonardo Bursztyn, and Hans-Joachim Voth, (2022). “Killer Incentives: Status Competition and Pilot Performance during World War II,” Review of Economic Studies 89(5): 2257–2292 

Examines the effects of recognition and status competition using data on monthly “victory” scores of more than 5,000 German pilots during World War II.  Status competition had important effects: After the German armed forces bulletin mentioned the accomplishments of a particular fighter pilot, his former peers performed considerably better.

Frey, Bruno S, and Jana Gallus, (2017). "Towards an economics of awards," Journal of Economic Surveys 31, no. 1: 190-200.

Shoes how research on awards has advanced over the last couple of years, thus providing points of departure for future work. 

Kuhn, Peter J. and Lizi Yu 2021 “Kinks as Goals: Accelerating Commissions and the Performance of Sales Teams” IZA working paper no. 14115. 

Accelerating commissions are convex reward schedules in which the marginal commission rate jumps upwards when output reaches a threshold.  The authors show that small retail sales teams are motivated by these accelerators, but not in the way predicted by standard economic models.  Instead, the teams appear to treat these thresholds as symbolic rewards that yield direct utility. 

Gallus, Jana, and Bruno S. Frey, (2017). "Awards as strategic signals," Journal of Management Inquiry 26, no. 1: 76-85.

Contrasts awards with other incentives such as monetary compensation and bonuses.  The analysis proposes under which conditions awards tend to raise performance, and when monetary compensation proves to be superior.

Imas, Alex and Kristóf Madarász 2022 Superiority-Seeking and the Preference for Exclusion NBER working paper no. 30334

The authors propose that a person’s desire to consume an object or possess an attribute increases in how much others want but cannot have it. They call this motive superiority-seeking, and study its implications for large variety of behaviors.  In the context of personnel economics, superiority-seeking could explain why people value non-monetary awards for good performance simply because the awards are scarce.

Gamification

Lyons, Elizabeth. “The Impact of Job-Specific Training on Contract Worker Performance: Field Experimental Evidence from Insurance Sales Agents,” working paper.  (no link currently available)

Amriani, Afifa, Alham F Aji, Andika Y Utomo, and Kasiyah M Junus, (2013). “An empirical study of gamification impact on e-Learning environment,” Computer Science and Network Technology (ICCSNT), 2013 3rd International Conference IEEE2013:265–269.

Experimentally studies the impact of removing and adding gamification in an e-Learning system for high school students.  Removing gamification significantly reduced student participation while adding gamification had no significant impact.

Hamari, Juho., Jonna Koivisto, and Harri Sarsa, (2014). “Does gamification work?–a literature review of empirical studies on gamification,” in "47th Hawaii International Conference on System Sciences” IEEE 2014:3025–3034. 

Reviews peer-reviewed empirical studies on gamification.  Gamification mostly provides positive effects, but the effects are greatly dependent on the particular context and the users. 

Ibanez, Maria-Blanca., Angela Di-Serio, and Carlos Delgado-Kloos, (2014). “Gamification for engaging computer science students in learning activities: A case study,” IEEE Transactions on Learning Technologies, 7 (3):291–301.

Studies the effects of gamified learning of the C-programming language.  The authors find positive effects on students’ engagement and a moderate improvement in learning outcomes.While economic models usually predict that people are less attracted to stochastic rewards than certain ones, neuroscience research with animals has shown that stochastic rewards may act as a powerful motivator.  

Hanus, Michael D, and Jesse Fox, (2015). “Assessing the effects of gamification in the classroom: A longitudinal study on intrinsic motivation, social comparison, satisfaction, effort, and academic performance,” Computers & Education, 80(C):152–161.

Students in the gamified course showed less motivation, satisfaction, and empowerment over time than those in the non-gamified course. 

Corgnet, Brice, Simon Gächter and Roberto Hernán González. (2020)  Working Too Much for Too Little: Stochastic Rewards Cause Work Addiction IZA discussion paper no. 12992. 

Applying these ideas to the study of work addiction in humans, the authors demonstrate how stochastic rewards may lead people to continue working on a repetitive and effortful task even after monetary compensation becomes saliently negligible, causing significant employee stress.  They discuss the economic and managerial implications of these findings. 

Imas, Alex and Kristóf Madarász 2022 Superiority-Seeking and the Preference for Exclusion NBER working paper no. 30334

The authors propose that a person’s desire to consume an object or possess an attribute increases in how much others want but cannot have it. They call this motive superiority-seeking, and study its implications for large variety of behaviors.  In the context of personnel economics, superiority-seeking could explain why people value non-monetary awards for good performance simply because the awards are scarce.

Benson, Alan, and Aruna Ranganathan 2020. A Numbers Game: Quantification of Work, Auto-Gamification, and Worker Productivity American Sociological Review, 85(3): 573-609.

Does monitoring workers improve or impair their productivity? Using personnel and operational data from an Indian garment manufacturing plant, the authors examine how an RFID monitoring intervention affected productivity.  They find that monitoring significantly increased productivity for simple work, but significantly decreased productivity for complex work. The authors argue that complex tasks are more meaningful, thus raising workers' intrinsic motivation.  Hawthorne effects are also observed, but they can be positive, negative, or neutral depending on work complexity.