When Galatea Cares About Her Reputation: How Having Faith in Your Workers Reduces Their Motivation to Shine
Tinbergen Institute Discussion Paper 10-123/1
29 Pages Posted: 12 Dec 2010
Date Written: December 6, 2010
We develop a theory of leadership that focuses on the role managers play in motivating employees through their attitude towards employees. We model a manager's attitude as her perception about employees' abilities of successfully completing challenging tasks. We show that a positive attitude motivates employees who are driven by monetary rewards. A negative attitude may motivate employees who are driven by concerns about their reputation for being able. When employees are driven by monetary rewards and care about their reputations, an increase in the reward for successfully completing challenging tasks may lead employees to shy away from these tasks.
Keywords: reputation, worker motivation, task choice, principle-agent, Giffen goods
JEL Classification: D82, M59
Suggested Citation: Suggested Citation