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Intrinsic Motivation and Dynamic Agency Contract

  • Isao MiuraEmail author
  • Keiki Kumagae
Chapter
Part of the New Frontiers in Regional Science: Asian Perspectives book series (NFRSASIPER, volume 18)

Abstract

In conventional agency theory, the situation in which the principal lets the agents be motivated to choose the desirable action for him by giving a (monetary) reward is mainly considered. Such a motivation given from outside is called extrinsic motivation in psychology. However in reality, a worker in a firm would not necessarily work only for a reward. The worker has incentive produced internally through sense of accomplishment to be acquired from work and a feeling of self-affirmation to feel that work is useful for the firm and for society. We designate such an incentive intrinsic motivation and distinguish such motivations of two types. Actually, when the firm employs workers and manages them, it would be important for the firm to examine how to promote worker motivation for effective management while considering intrinsic motivation. In this model, in addition to an external motivation as a reward, we assume that an agent with intrinsic motivation contributes for the firm by working diligently to let the work succeed. For the firm, which means the principal, we consider how it should design the contract with the worker having intrinsic motivation. Especially, we analyze a dynamic case theoretically in which a short-term contract is updated and agency relations are continued for two periods.

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Copyright information

© Springer Nature Singapore Pte Ltd. 2017

Authors and Affiliations

  1. 1.Kyushu UniversityFukuokaJapan

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