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Wage delegation and intrinsic motivation: an experimental study

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  • Marco Faillo
  • Costanza Piovanelli

Abstract

The aim of this study is to investigate experimentally whether and to what extent subjects’ intrinsic motivation and performance change when they are allowed to self-set their own wage for performing a task; moreover, it investigates how differently motivated people react to the possibility of deter- mining their own wage. We propose a novel experimental design, in which the subjects are asked to perform a complex real-effort task under two different conditions: wages can be either chosen by the subjects themselves, or randomly determined. With this setting, we are able to disentangle intrinsic motivation from the reciprocity concerns that are likely to characterize the standard principal-agent interaction. Our main result is that subjects increase their performance more when they are delegated the wage choice than when they receive a random payment; moreover, subjects who are both highly motivated and delegated their wage choice are those who perform better. Finally, subjects with higher motivation ask for lower wages.

Suggested Citation

  • Marco Faillo & Costanza Piovanelli, 2017. "Wage delegation and intrinsic motivation: an experimental study," CEEL Working Papers 1701, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    • Handle: RePEc:trn:utwpce:1701
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    File URL: http://www-ceel.economia.unitn.it/papers/papero17_01.pdf
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    Cited by:

    1. Sabrina Jeworrek & Vanessa Mertins, 2019. "Wage delegation in the field," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(4), pages 656-669, November.
    2. Christian Brück & Thorsten Knauer & Harald Meier & Anja Schwering, 2021. "Self-set salaries and creativity," Journal of Business Economics, Springer, vol. 91(1), pages 91-121, February.

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    More about this item

    Keywords

    Compensation; Incentives; Delegation; Motivation; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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