TY  - RPRT
        AU  - Sliwka, Dirk
        TI  - On the Hidden Costs of Incentive Schemes
        PY  - 2003/Aug/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 844
        UR  - https://www.iza.org/publications/dp844
        AB  - By enriching a principal-agent model it is shown that the introduction of monetary incentives
may reduce an agent’s motivation. In a first step, we allow for the possibility that some agents
stick to unverifiable agreements. The larger the fraction of reliable agents, the lower powered
will then be the optimal incentive scheme and fixed wages become optimal when
performance measurement is costly. If social norms matter such that some agents’ reliability
is influenced by their beliefs on the convictions of others, high powered incentives signal that
not sticking to agreements is a widespread behavior and may lead to lower effort levels.
        KW  - incentives
KW  - motivation crowding-out
KW  - intrinsic motivation
KW  - honesty
        ER  -