Incentivizing Workers Using Prosocial Motivations

Abstract

As organizations move towards increasingly group-based work environments, workers make more decisions on how much effort they will exert for the benefit of their coworkers. Past research on prosocial behavior has not compared people’s willingness to exert effort for others versus for themselves, a gap this research fills. In three experiments using real-effort tasks, participants either worked for a fixed payment, for pay-for-performance incentives, or toward the payment of another participant (and no benefit to themselves). We found that "pay-for-others" incentives were driven by "conditional indirect reciprocity": They were effective when workers believed both that 1) their own payment was based on someone else’s effort, and 2) their beneficiary would be told about his or her source of payment. Pay-for-others incentives effectiveness was moderated by the social cost of not working. Finally, because pay-for-performance incentives can crowd out intrinsic motivation, pay-for-others incentives were actually more motivating than traditional incentives under certain conditions.

Keywords: prosocial behavior, work motivation, incentives, indirect reciprocity, social norms

JEL Classification: C91, D03, M55