Bidimensional Screening with Intrinsically Motivated Workers

Quaderni DSE Working Paper No. 866

58 Pages Posted: 4 Feb 2013 Last revised: 12 Sep 2014

See all articles by Francesca Barigozzi

Francesca Barigozzi

University of Bologna - Department of Economics

Nadia Burani

University of Bologna - School of Economics, Management, and Statistics

Date Written: February 4, 2013

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.

Keywords: bidimensional screening, self-selection, intrinsic motivation, skills

JEL Classification: D82, D86, J31, M55

Suggested Citation

Barigozzi, Francesca and Burani, Nadia, Bidimensional Screening with Intrinsically Motivated Workers (February 4, 2013). Quaderni DSE Working Paper No. 866, Available at SSRN: https://ssrn.com/abstract=2211401 or http://dx.doi.org/10.2139/ssrn.2211401

Francesca Barigozzi (Contact Author)

University of Bologna - Department of Economics ( email )

P.zza Scaravilli 2
40126 Bologna, 40126
Italy

Nadia Burani

University of Bologna - School of Economics, Management, and Statistics ( email )

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