The paper discusses the theoretical foundations of an incentive provision system based both on material and immaterial (moral and social) incentives.
We focus on the normative implications streaming from an enlargement of the idea of rationality traditionally applied to the analysis of strategic choices: when self-interest, in fact, is supplemented with behavioral principles such as reciprocity, trust, altruism and intrinsic motivation, the way incentives have to be designed and provided should change consequently. We first describe the functioning of such principles and then analyze in some depth the way those factors can be used to favor an efficient matching between principal and agents endowed with functional preferences in presence of asymmetric information. Such an efficient matching produces positive effects on the effort provided by agents which, in turn, positively affects organizational efficiency.
This process applies with particular cogence to economic environments characterized by vocational workers (civil economy), where intrinsic motivations are a crucial determinant of workers’ morale. Those settings are affected by social strategic complementarity that may yield to pareto-rankable multiple equilibria. We introduce instruments that should favor the functioning of the matching process and advocate their implementation to foster an internally-driven sectorial development process.