Two types of intrinsically motivated workers are considered: “good” workers care about the mission of an organization, whereas “bad” workers derive pleasure from destructive behavior. Compared to the case with only good motivated workers, the mission-oriented sector has to resort to higher monitoring to deter bad workers from entering the sector. In equilibrium, bad workers work in the for-profit sector where they behave like “normal”people, while good workers self select into the mission-oriented sector. In the profit-oriented sector, both monitoring and bonus payments for good behavior increase to control the damage caused by bad workers. The results of the paper are illustrated by examples from child care and the threat posed by pedophiles in this sector.
intrinsic motivation; incentive contract; non-profit; sabotage; candidate selection;
Journal of Public Economics, vol. 117, September 2014, pp. 149–161