Intrinsic and Extrinsic Motivation

1
Intrinsic and Extrinsic Motivation

• Matthias Wibral

2
Objectives of the Übung

• Answer questions regarding the content of the
  lectures
• wibral_at_uni-bonn.de
• Review important concepts and insights
• Discuss additional models, methods and results
• Help instructor to become a good teacher

3
Intrinsic and Extrinsic Motivation - Background

• Operant tradition (Skinner, 1953)
• extrinsic rewards can control behavior and should
  be used as motivational strategy (e.g. token
  economy programs)
• 1970s How do extrinsic rewards affect intrinsic
  motivation?
• Crowding out hypothesis

4
Warm-up

• What does the crowding out hypothesis state and
  what does a classic experiment to test this
  hypotheses look like?
• What are the main theories from social psychology
  that have been put forward to explain why
  crowding out may occur?

5
Intrinsic and Extrinsic Motivation - Background

• Operant tradtition (Skinner, 1953)
• extrinsic rewards can control behavior and should
  be used as motivational strategy
• 1970s How do extrinsic rewards affect intrinsic
  motivation?
• Crowding out hypothesis
• Cognitive Evaluation Theory (Deci, 1975)
• Self-Perception Theory (Lepper et al., 1973)

6
Basic arguments of CET and SPT

• Cognitive Evaluation Theory
• Intrinsic motivation based on the psychological
  needs for
• Autonomy, Self-Determination
• Competence
• Rewards can be perceived as controlling or
  (positively) informational
• Self-Perception Theory
• People make postbehavioral attributions about the
  causes of their own behavior
• Overjustification Effect when task is
  intrinsically rewarding and strong and salient
  extrinsic rewards, attribute motivation to
  salient extrinsic reward

7
Intrinsic and Extrinsic Motivation Background

• Operant tradtition (Skinner, 1953)
• extrinsic rewards can control behavior and should
  be used as motivational strategy
• 1970s How do extrinsic rewards affect intrinsic
  motivation?
• Crowding out hypothesis
• Cognitive Evaluation Theory (Deci, 1971)
• Self-Perception Theory (Lepper et al., 1973)
• 1990s Meta-Analyses

8
Methodological Aside Meta-Analysis

• Aim of a meta-study compare numerous studies to
  generate overall picture
• Steps
• Selection of studies to be included
• Coding and division into groups
• Calculation of the measure for effect size for
  each study
• Converting of the results of each study to a
  common statistic
• Problems?

9
Warm-up

• Why is the debate about intrinsic and extrinsic
  motivation interesting for economics?

10
What does economics have to say?

• Models of non-standard effects of incentives
• Bénabou/Tirole (2006, AER) Incentives and
  Prosocial Behavior
• Multidimensional signalling
• Benabou/Tirole (2003, RES) Intrinsic and
  Extrinsic Motivation
• Asymmetric information (informed principal)

11
What does economics have to say?

• Benabou/Tirole (2006) discussed in lecture
• Three motives for prosocial behavior
• intrinsic extrinsic reputational
• Interaction of these motives can explain
  dysfunctional effect of incentives.
• Intuition Incentives spoil the reputational
  value of prosocial behavior (overjustification
  effect).

12
Warm-up

• Why is this called a multidimensional signalling
  model?

13
Decision problem

• FOC
• with
• Note observation of a reveals only the sum of
  the three motivations (signal extraction problem)

14
Warm-up

• Does this model capture the essence of the debate
  in the psychological literature?

15
Intrinsic and Extrinsic Motivation

• Benabou, R., Tirole, J., (2003), Review of
  Economic Studies, 70, 489-520

16
Motivation

• Why and when do extrinsic rewards crowd out
  intrinsic motivation?
• Model interaction between agent with imperfect
  self-knowledge and an informed principal who
  chooses an incentive structure
• Formalizes the idea that the subject may find a
  task less attractive when offered a reward

17
Model

• Agent
• chooses whether to exert effort or not
• Cost of effort
• exerts effort if task perceived as attractive
• self-knowledge is relevant
• Probability of success if effort exerted ?, else
  0
• Direct payoffs if task successful
• V for agent
• W for principal

18
Model

• P selects contingent reward
• Payoffs in case of success (Vb, W-b).
• Timing
• P selects A tries/
• contingent reward does not try
• 0bW

19
Benchmark Case Symmetric Information

• Symmetric information Agent exerts effort if
• ?(Vb)c.
• Reward is a positive reinforcer.
• Intrinsic motivation ?V
• Extrinsic motivation ?b

20
Asymmetric Information

• However, principal may have more information
  about
• Difficulty/attractiveness of task
• Asymmetric information
• A tries to infer Ps private information from Ps
  decision
• (looking-glass self)
• Twofold influence of Ps decision on As behavior
• Direct through impact on agents payoff
• Indirect through inference process

21
Asymmetric Information

• Only P knows c
• A only learns a (private) signal s with G(slc)
  and g(slc).
• Signal could be based on past personal or
  friends experience, or on initial perception
• Important assumption MLRP

22
Monotone Likelihood Ratio Property

• or
• Higher s is good news signal is negatively
  related to cost
• Of two signals, the better one will not become
  relatively more likely than the worse one if
  costs were to rise.

23
Asymmetric Information

• Only P knows c
• A only learns a (private) signal s with G(slc)
  and g(slc).
• Signal could be based on past personal or
  friends experience, or on initial perception
• Important assumption MLRP
• Perfect Bayesian Equilibrium
• (A PBE is a strategy profile and belief system
  such that strategies are sequentially rational at
  each node of the game tree and beliefs are
  consistent.)

24
Equilibrium

• At the second stage agent forms an expectation
  E(cs,b)
• and exerts effort if
• ?(Vb)E(cs,b)
• No longer a clean separation between intrinsic
  and extrinsic motivation.

or s s(b)
25
Equilibrium

• Ps optimization problem
• Let B denote set of all equilibrium bonuses
• If this was not the case, P could increase
  likelihood of
• effort while offering the lower wage.
• Rewards are positive short-term reinforcers.

26
Equilibrium

• Rewards are bad news. A confident principal
  offers a lower wage/bonus.

27
Equilibrium - Summary

• Bonus is a short term reinforcer if b2gtb1, then
  s(b1)gts(b2).
• Bonus is bad news, if c2gtc1 then b2b1.
• Bonus undermine As perception about task
  attractivness if b1ltb2, then E(cb1, s) lt
  E(cb2, s).
• Conclusion Extrinsic motivation can crowd out
  intrinsic motivation in the long term.

28
Warm-up

• What does the model have to do with this fence?

Hint Think about blt0. Hint 2 Ps name in this
case is Thomas S..