On the Social Psychology of Agency Relationships: Lay Theories of Motivation Overemphasize Extrinsic Incentives

Three laboratory studies and one field study show that people generally hold lay theories which contain an extrinsic incentives bias-people predict that others are more motivated than themselves by extrinsic incentives (job security, pay) and less motivated by intrinsic incentives (learning new things). The extrinsic incentives bias can be separated from a self-serving bias and it provides an empirical counterexample to the traditional actor-observer effect in social psychology (although its theoretical explanation is similar). This kind of bias may hinder organizations from organizing because people who act as principals may use improper lay theories to offer inappropriate deals to agents. Copyright 1999 Academic Press.