Rational Cheaters vs. Intrinsic Motivators

Some companies go to great lengths to monitor their workers to discourage stealing and other bad behavior. While monitoring may weed out scofflaws, it may also have a deleterious effect on the morale and motivation of other employees. Therein lies the dilemma, according to the authors of a March 2002 National Bureau of Economic Research working paper, which will be published in a forthcoming issue of the American Economic Review.

The paper,“Monitoring, Motivation and Management: The Determinants of Opportunistic Behavior in a Field Experiment,” reports on a study involving 768 employees of a U.S. telemarketing company, each of whom was asked to phone potential donors to request contributions for a nonprofit organization. To prevent the callers from inflating donation figures, managers later contacted a fraction of the donors to confirm their pledges. Although employees received bonuses for exceeding pledge targets, each week the company deducted “bad calls” (unconfirmed pledges) from bonus totals. During the study, the number of bad calls reported to employees was manipulated to make the degree of monitoring appear to be less than it actually was. By giving employees the impression that cheating was possible, the company hoped to learn how likely it was that employees would be dishonest.

In fact, cheating did increase when monitoring was less apparent, lending credence to the authors' “rational cheater” model, which predicts that employees are rational actors who opportunistically step up their cheating when they think that no one is looking. But not all telemarketing employees behaved that way. Among a substantial number, less monitoring did not spur more cheating. To investigate this further, the authors surveyed callers about their attitude toward their employer. They collected 156 responses to the survey, which included statements such as “The company cares about me” and questions like “How easy [would it be] for you to find an equivalent job?”

Individuals with a lower than median attitude score logged 79% more bad calls, report the four authors — Daniel Nagin, Teresa and H. John Heinz III Professor of Public Policy, and Lowell Taylor, assistant professor of economics and public policy, both of Carnegie Mellon University's H. John Heinz III School of Public Policy; James Rebitzer, Frank Tracy Carlton Professor of Economics at Case Western Reserve University's Weatherhead School of Management; and Seth Sanders, a University of Maryland associate professor of economics.