How Intrinsic Motivation is Crowded out and in

Abstract

External interventions have a significant and systematic effect on preferences: Under specific conditions they crowd an individual's intrinsic motivation in or out. Rewards given or regulations applied by a principle are more likely to crowd out an agent's inner preference for a certain task. The more personal the relation between the two actors is, the more interesting the agent finds the task and the more extensive an agent's participation possibilities are. Empirical evidence supports the claim that, in many cases, agents, indeed, react to an external motivation by reducing their effort to fulfill a certain duty. This points to new limits of pricing as well as regulating, even though the price mechanism does not destroy intrinsic motivation to the same extent because it is less restrictive than regulation.

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