Essays on Incentive Design for Motivated Agents

Traditional economic theory assumes that individuals are self-interested. Namely, they are exclusively interested in their own utility disregarding the benefits that their action causes to the others. However, the assumption of selfish individuals proves unable to explain a number of important phenomena and puzzles. Individuals frequently engage in activities that are costly to themselves and mostly benefit others. They vote, volunteer time, help strangers, give to political or charitable organizations, donate blood, and sometimes even risk or sacrifice their life for strangers. A possible explanation for these actions is that the behavior of the individuals can be affected by altruistic, equity and reciprocity considerations (see for example Fehr and Schmidt, 1999). In this sense individuals can be intrinsically motivated: “One is said to be intrinsically motivated to perform an activity when he receives no apparent reward except the activity itself” (Deci, 1971). In this thesis, I analyze how intrinsic motivation affects individuals’ behavior in a number of different situations, such as a public good contribution problem or a school selection of motivated teachers. Furthermore, I am interested in understanding how people respond to different incentives in order to better inform policies. .. [edited by Author]