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Monday, May 16 • 3:45pm - 4:45pm
The Meaning of Money: How Incentives Affect Behavior

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The assumption that all incentives are created equal can lead principals to construct inefficient pay programs that ignore the meaning of the incentives to the targeted agent. The starting point of the talk is the misleading separation between material compensation and psychological affects: Traditionally economists focus on extrinsic motivation such as money, while psychologists care more about intrinsic motivation such as job satisfaction. I argue that this separation misses an important interaction effect: The signal sent by the principal in creating the incentives determines the meaning of pay. Considering this signal and its interpretation is crucial in optimizing pay. After discussing ways in which incentives affect intrinsic motivation in either positive or negative way, I will draw insights from behavioral economics research to demonstrate how small differences in the structure of such pay programs can change the interaction of intrinsic and extrinsic motivation, and as such greatly impact effectiveness.

avatar for Uri Gneezy

Uri Gneezy

Epstein/Atkinson Endowed Chair in Behavioral Economics, Professor of Economics & Strategy | | "As a researcher, my focus is on putting behavioral economics to work in the real world, where theory can meet application. I’m looking for basic research as well as more applied approaches to such topics as incentives-based interventions to increase good habits and decrease bad ones, Pay-What-You-Want pricing, and the detrimental effects of... Read More →

Monday May 16, 2016 3:45pm - 4:45pm
KON TIKI Catamaran 2nd Floor

Attendees (38)