Shchetinin, Oleg (2009) Altruism and Career Concerns. TSE Working Paper, n. 09-093

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Abstract

The paper studies the impact of altruism on Agent’s motivation in the
career concerns model. The paper shows the new channel of interaction
between intrinsic and extrinsic motivation. The common point in the literature is that intrinsic motivation can be crowded out by the extrinsic
incentives. My paper shows that crowding effect can go in the opposite
direction: extrinsic incentives can be lessened for the intrinsically motivated agent. The analysis shows that altruism can decrease effort, though conventional wisdom suggests that effort should always be higher for the more altruistic worker. The key for the result is the distinction between current and anticipated altruism. The paper also studies the effect of altruism on wage. The model has a number of other interesting features. It gives an example of winner’s blessing, it shows that ambitions can hinder altruistic relation. The model can be naturally applied to the workplace relation; another application is the local public good provision.