Measuring and Managing Performance in Organizations

Chapter Six. Bringing Internal Motivation into the Model

The agent is motivated in three distinct ways, two of which were already discussed. As in the R-H model, the agent is eager for money and dislikes work. As before, the agent can be convinced to work harder if he is paid more, and the amount that he must be paid increases with the total level of effort. Unlike in the earlier model, however, now targets may be associated with a specific effort allocation—such as (5, 3)—rather than a total effort level—like eight total units of effort. The reason for the difference should be clear: Although the agent has equal aversion to effort expenditures required by allocations (5, 3) and (8, 0)—equal because both allocations require 5 + 3 = 8 + 0 = 8 ...