Efficiency Wages and Non-monetary Motivational Strategies: an Experimental Approach
Author: Saima Mahmood

Neoclassical theory of labor markets is often criticized for not incorporating the behavioral complexity related to labor supply decisions. Decisions of the economic agents are subject to rationality that endorses the motive of self-interest and economics revolves around optimal decisions in the light of this self-interest. Empirical observations show that this assumption of economic rationality collapses when non-economic variables (fairness, equity, altruism, reciprocity etc.) affect economic decisions. Labor supply decisions are influenced by emotional, psychological, and social baggage which is ignored in mainstream optimization analysis. Earlier research studies proved the importance of emotional and social baggage for instance loyalty, gratitude, and reciprocity in labor supply decisions (Fehr and Gachter, 1998; 2002; Fehr and Falk, 1997; Fehr et al., 1996; Fehr et al., 1997; Gachter and Falk, 2000).

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Keywords : Appreciation and Recognition, Efficiant Wages, Motivation and Incentives, Motivational Strategies, Non-monetary Motivational Strategies
Supervisor: Asad Zaman
Cosupervisor: Rehana Siddiqui

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