Work Motivation, Institutions, and Performance

IEER Working Paper No. 62

24 Pages Posted: 8 Feb 2001

See all articles by Simon Gächter

Simon Gächter

CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Armin Falk

briq - Institute on Behavior & Inequality

Date Written: October 2000

Abstract

In this paper we study experimentally four remedies to overcome inefficiencies that arise from the incompleteness of contracts. These remedies are reciprocity, repeated game effects, social embeddedness, and incentive contracts. In our baseline treatment we find that reciprocity is a powerful contract enforcement device. A second experiment establishes that repeated game effects interact with reciprocity in a complementary way, i.e., efficiency is increased compared to our baseline. Adding social approval incentives does not contribute significantly to efficiency. Finally, we show that explicit incentive contracts may have perverse effects in the sense that they "crowd out" reciprocity and therefore reduce efficiency compared to the baseline. In our concluding section we discuss the relation of our findings to the recent literature on "intrinsic motivation".

JEL Classification: D64, J30, J50, J64, C92

Suggested Citation

Gächter, Simon and Falk, Armin, Work Motivation, Institutions, and Performance (October 2000). IEER Working Paper No. 62. Available at SSRN: https://ssrn.com/abstract=259258 or http://dx.doi.org/10.2139/ssrn.259258

Simon Gächter (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Armin Falk

briq - Institute on Behavior & Inequality

Schaumburg-Lippe-Straße 5-9
Bonn, 53113
Germany

HOME PAGE: http://www.briq-institute.org/

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