In this research project, the PIs will conduct laboratory experiments that examine the desire to ?do good? as an intrinsic motive for working. The experiments involve a new incentivized game setting where worker effort, instead of benefitting an employer?s profit, instead benefits a third party: a needy individual, a group of such individuals, or a public good. The experiments test the effects of incentive contracts (requests, rewards, and punishment) on productivity in these settings, and assess the potential for short-run and long-run crowding out of intrinsic motivation by extrinsic rewards. This project is inspired by recent developments in economic theory. Economics is concerned with the extrinsic motivation provided by wages, which compensates for the disutility of work, while social and educational psychologists study intrinsic motivation, an inherent interest in the work itself. The prevailing finding of this research is that financial rewards crowd out intrinsic motivation. Economic theory that incorporates nonpecuniary motives ? such as self-esteem, identity, and status ? concludes that the compensation of intrinsically motivated workers will involve smaller incentive-based payments. This occurs in part because of the potential for crowding out, but in addition, low wages serve to limit the applicant pool to workers whose valuation of the organization?s mission is highest. While theory incorporates a broad set of intrinsic motives, most experimental research has focused on reciprocity between the agent and the principal. In experiments based on trust or gift-exchange, high wages elicit high effort on the part of workers, but the introduction of incentive contracts that involve monitoring and sanctions robustly crowds out such intrinsic reciprocity. Work environments where the worker?s effort produces a ?good? for someone other than the employer have not been tested previously. However, other motivations, such as altruism, may greatly impact effort choices in the workplace, particularly when the job involves positive externalities or some other form of ?doing good.? In these cases, incentive contracts may crowd out the desire to do good, as theory suggests, or may indeed reinforce intrinsic motivation. Exogenously changing employment contracts in the real world is difficult or impossible, making laboratory experiments an ideal method to address this issue. Broader significance and importance: In terms of broader impacts, the research will shed light on the interaction between worker motivation and the structure of employment contracts. When deciding to accept employment or exert effort on behalf of an employer, workers take into account not only the monetary compensation, but also the type of work and the mission of the organization. This project focuses on settings where nonpecuniary factors are key aspects of the job, and individuals make choices not only about ?doing well,? but also ?doing good.? Many important organizations exist to benefit third parties, and are most effective when they can attract and motivate workers who support their missions. Our work contributes to the development of institutions that foster altruism and cooperation among workers who work for a cause, and not just for the money. On a scientific level, our work contributes to understanding the impact of non-pecuniary motivations on decision making by individuals in a wide variety of settings. The project also implements and evaluates a mentoring component, which utilizes a novel structure and provides a valuable collaborative research experience to young scholars at all levels, from undergraduate students to post-doctoral scholars.
