Are increased costs worth paying to raise non-monetary utility?: Analysis of intrinsic motivation and fringe benefits

Authors: Matsumura, Ryohei¹; Kobayashi, Norimasa²

Source: International Transactions in Operational Research, Volume 15, Number 6, November 2008 , pp. 705-715(11)

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Abstract:

In standard agency models, only performance-based wages (monetary incentives) motivate an agent to work more. The present paper proposes a new agency model in which the principal makes an investment, in addition to the standard wage incentive, to raise non-monetary utility. We clarify two problems according to the type of non-monetary utility: the intrinsic motivation (IM) problem and the fringe benefits (FB) problem. The results of our analysis of both problems are as follows: (1) The results of the IM model and the FB model are similar regarding monetary payment. (2) Although IM is dependent on the attributes of a job and the worker, such as productivity or cost sensitivity, FB is not dependent on such factors.

Keywords: agency model; incentive system; intrinsic motivation; non-monetary utility; fringe benefits

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1475-3995.2008.00633.x

Affiliations: 1: Faculty of Business Administration, Toyo University, 5-28-20 Hakusan Bunkyo-ku, Tokyo 112-8606, Japan, Email: matsumura@toyonet.toyo.ac.jp 2: Department of Value and Decision Science (VALDES), Graduate School of Decision Science and Technology, Tokyo Institute of Technology, 2-12-1 Ookayama, Meguro-ku, Tokyo 152-8552, Japan, Email: nkoba@valdes.titech.ac.jp

Publication date: 2008-11-01