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 hol d lay theories which contain an extrinsic incentives bias-people predict th at others are more motivated than themselves by extrinsic incentives (job s ecurity, pay) and less motivated by intrinsic incentives (learning new thin gs). The extrinsic incentives bias can be separated from a self-serving bia s and it provides an empirical counterexample to the traditional actor-obse rver effect in social psychology (although its theoretical explanation is s imilar). This kind of bias may hinder organizations from organizing because people who act as principals may use improper lay theories to offer inappr opriate deals to agents. (C) 1999 Academic Press.