Abstract for: Monetary Incentives as a Fix that Fails with Reciprocal Employees

Research has shown that the effect of monetary incentive systems on employee output is not straightforward. Based on literature on reciprocity and behavioral economics this paper distin-guishes the effects of incentives on opportunistic and reciprocal employees. It illustrates how the relationship between incentives and output can be presented by different balancing and reinforcing feedback loops for different groups of employees, representing a fixes that fail mechanism in the case of reciprocal employees. The behavioral analysis of the developed system dynamics model shows a counterintuitive effect of high monetary incentives, in particular when the workforce is reciprocal and does not desire monetary incentives. The analysis also reveals that employee behavior is not determined by their either reciprocal or opportunistic disposition, but that it evolves in relation to context.