Intrinsic and Extrinsic Motivation, Study notes of Economics

Download Intrinsic and Extrinsic Motivation and more Study notes Economics in PDF only on Docsity! Intrinsic and Extrinsic Motivation Roland Béenabou* - Jean Tirole ** Review of Economic Studies (July 2003) * Princeton University, NBER and CEPR ** IDET, CERAS, CEPR, and MIT Study of interpersonal strategies in social psychology: emphasis on interaction between individual's self- esteem and his environment. LOOKING-GLASS SELF Environment's (principal's) Individual's (agent's) behavior SELF-PRESENTATION behavior .| AGENT EXTRACTS INFORMATION FROM PRINCIPAL'S BEHAVIOR: THE LOOKING-GLASS SELF *Stage 1: P selects "policy" *Stage 2: A selects effort/no effort *Hypothesis: A sees through P's ulterior motivation — need "sorting condition". Otherwise: - compliments to ingratiate oneself, - parents’ exhortations for children to work hard, - comfort given to depressed individuals, may backfire! 5 THE HIDDEN COST OF REWARDS (money, praise, working conditions.,...) - Economics: contingent rewards are positive reinforcers. ¢ Psychology literature: contingent rewards can be positive or negative reinforcers: (1) limited impact on current performance (engagement), (2) reduce future intrinsic motivation (re-engagement). MODEL * Stage 1 policy = select contingent reward (bonus b in case of success). Payoffs in case of success (V+b, W-b). - P knows 8, A knows only o (distribution G(o|9)). MLRP - Timing: P selects A tries / contingent reward does not try 0<b<W 7 “There is no doubt that the benefits of [piece--rate systems or pay--for--performance incentive devices] can be considerably compromised when the systems undermine workers’ intrinsic motivation.” Baron and Kreps (1999) 10 ¢ Pure behaviorist approach (Hull 1943, Skinner 1953): stimulus © —————~ _ response (reward) (lack of effort) Not satisfactory: (1) Causes of aversive response to reward? (2) When do rewards work and when do they backfire? 11 Symmetric information. Agent exerts effort iff Q(V + b)>c. Reward is a positive reinforcer. Intrinsic motivation : 6V. Extrinsic motivation : 6b. Asymmetric information. Agent exerts effort iff E(@\lo,b)V+b)>c or o2 o*(b) No longer a clean separation between intrinsic and extrinsic motivation. 12 ¢ Informational impact of rewards: “Every reward (including feedback) has two aspects, a controlling aspect and an informational aspect which provides the recipient with information about his competence and self--determination. ” Deci (1975, p142) ¢ Re-engagement effects of rewards: “Reinforcement has two effects. First, predictably it gains control of [an] activity, increasing its frequency. Second,...when reinforcement is later withdrawn, people engage in the activity even less than they did before reinforcement was introduced.” (Schwartz (1990), commenting on Lepper et al. (1973)) 15 ¢ Reinterpretation : incomplete information about attractiveness (c ) of task. * Cognitive psychology (Lepper et al 1973, Deci- Ryan 1985): — reward provides information about competence and self-determination, — ST positive, LT negative reinforcement. 16 Extrinsic vs. Instrinsic Motivation: incomplete information about the nature the task * @ is symmetric information. ¢ Principal knows the cost c of undertaking the task. ¢ Agent only has signal y distributed according to a cumulative distribution G(y | c) with the MLRP. ¢ Agent exerts effort if and only if OV +b)2 E(clo.b) oft-GG'@) pW ->] * Principal's objective function is In equilibrium, a higher reward is associated with a less attractive task; thus, bonuses reduce intrinsic motivation. Conversely, “forbidden fruits” are the most appealing. 7 ¢ When can there be a hidden cost? — principal has information (educational setting vs workplace) — sorting condition: |principal must be more tempted to reward agent when agent has limited ability or task is boring. 20 “Tf a person's feelings of competence and self--determination are enhanced, his intrinsic motivation will increase. If his feelings of competence and self--determination are diminished, his intrinsic motivation will decrease.” “We are suggesting that some rewards or feedback will increase intrinsic motivation through this process and others will decrease it, either through this process or through the change in perceived locus of causality process.” Deci (1975, p. 41): 21 SIMILAR ASPECTS OF LOOKING-GLASS SELF ¢ Delegation: may signal trust Pfeffer (1999) ‘when employees are subjected to close external monitoring or surveillance, they may draw the psychological inference that they are not trusted and thus not trustworthy, acting in ways that reinforce this perception." ¢ Help — depression (dependent personality pattern), — overhelping. ¢ Disclosure of information and coaching 22 EGO BASHING AND BATTLES FOR DOMINANCE ¢ Power relationship: — try to establish dominance over each other along some dimension. Why? ¢ Two individuals, 1 and 2. Joint decision (shared formal control rights): select between | I 1's idea 2's idea (By + B OV | 0.V 0.V+B 25 m Tame version of "battle of the egos" OFV+B>6V>65V+B ¢ Individual 1's hard information: H > if O: 0, (bad news) if 26 *Timing: Stage 1: The principal learns 0, and (if 6, = 0) 2 chooses whether to disclose the information. Stage 2: Both come up with an idea each for a joint undertaking. Stage 3: With probability 1/2 each, one is selected to make a take-it-or-leave-it project offer, i.e., chooses the project. [We rule out monetary transfers between the two individuals. ] 27