Rablen, M.D. orcid.org/0000-0002-3521-096X (2010) Performance targets, effort and risk-taking. Journal of Economic Psychology, 31 (4). pp. 687-697. ISSN 0167-4870
Abstract
Growing economic and psychological evidence documents effects of target setting on levels of effort and risk-taking, even in the absence of a monetary reward for attaining the target. I explore a principal–agent environment in which the principal sets the agent a performance target, and the agent’s intrinsic motivation to work is influenced by their performance relative to the target. When the agent has prospect theory preferences relative to the target I show that a performance target can induce greater effort, but, when set too high, it eventually induces lower effort. Also, the agent’s preferences for risk-taking hinge on whether the target is set above or below expected output. I find that the principal’s optimal target exceeds expected output.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2010 Elsevier. This is an author produced version of a paper subsequently published in Journal of Economic Psychology. Uploaded in accordance with the publisher's self-archiving policy. Article available under the terms of the CC-BY-NC-ND licence (https://creativecommons.org/licenses/by-nc-nd/4.0/). |
Keywords: | Performance targets; Intrinsic motivation; Prospect theory; Principal–agent theory; Reference-dependent preferences |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 13 Apr 2018 10:37 |
Last Modified: | 13 Apr 2018 10:37 |
Published Version: | https://doi.org/10.1016/j.joep.2010.05.002 |
Status: | Published |
Publisher: | Elsevier |
Refereed: | Yes |
Identification Number: | 10.1016/j.joep.2010.05.002 |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:129618 |