Bidimensional Screening with Intrinsically Motivated Workers
Quaderni DSE Working Paper No. 866
58 Pages Posted: 4 Feb 2013 Last revised: 12 Sep 2014
Date Written: February 4, 2013
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: Suggested Citation