Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Identity and the Economics of Organizations
Journal of Economic Perspectives
vol. 19,
no. 1, Winter 2005
(pp. 9–32)
(Complimentary)
Abstract
The economics of organizations is replete with the pitfalls of monetary rewards and punishments to motivate workers. If economic incentives do not work, what does? This paper proposes that workers' self-image as jobholders, coupled with their ideal as to how their job should be done, can be a major work incentive. It shows how such identities can flatten reward schedules, as they solve "principal-agent" problem. The paper also identifies and explores a new tradeoff: supervisors may provide information to principals, but create rifts within the workforce and reduce employees' intrinsic work incentives. We motivate the theory with examples from the classic sociology of military and civilian organizations.Citation
Akerlof, George, A., and Rachel E. Kranton. 2005. "Identity and the Economics of Organizations." Journal of Economic Perspectives, 19 (1): 9–32. DOI: 10.1257/0895330053147930JEL Classification
- D23 Organizational Behavior; Transaction Costs; Property Rights
- D82 Asymmetric and Private Information; Mechanism Design
- J28 Safety; Job Satisfaction; Related Public Policy
- J41 Labor Contracts
- M14 Corporate Culture; Diversity; Social Responsibility
- M50 Personnel Economics: General
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