Should a child be rewarded for passing an exam, or paid
to read a book? What impact do empowerment and
monitoring have on employees’ morale and productivity?
Does receiving help boost or hurt self-esteem? Why do
incentives work well in some contexts, but appear
counterproductive in others? Why do people sometimes
undermine the self-confidence of others on whose effort
and initiative they depend?
These questions will be studied here from a unifying
perspective, emphasizing the interplay between an
individual’s personal motivation and his social
environment. We shall thus model the interactions
between an agent with imperfect self-knowledge and an
informed principal who chooses an incentive structure,
such as offering rewards and threatening punishments,
delegating a task, or simply giving encouragement,
praise, or criticism. pdf
