Traditionally, in economics the theory of incentives makes the implicit assumption that the more an individual is paid the higher his effort, even if there is some decreasing returns of payments. It is then possible for a principal to define his (or her) policy in terms of the relation that it is possible to establish between the wage and bonus given to the agents and their efforts.

The idea that monetary incentives are always efficient is however a too strong assumption. Frey and Oberholzer-Gee (1997), Kreps (1997), and more recently Bénabou and Tirole (2003) show that something like a ‘crowding-out effect’ may occur. This effect supports the idea that intrinsic incentives (that is motivation) can be crowded out? by extrinsic ones, such as monetary rewards. In this way Bénabou and Tirole show that in a context of asymmetric information an agent can infer information from the policy of the principal. This information can be linked to the characteristics of the task he (or she) has to perform, the principal’s confidence in his (or her) capabilities, the will of the principal to batch (? flatter) his (or her) ego and so on. Those results are however not taking into account the fact that  individuals can give a different meaning to the same information.  This may be due to differences in (their) preferences or in the value they attach to their  work (see for example Vos and al. 2003). Psychologists instead have developed tools in order to explain how individuals react when facing different kinds of incentives. The Cognitive Evaluation Theory (CET) and, more recently, the Self Determination Theory (SDT) are analyzing how incentives may influence intrinsic motivation. Our aim is to show that psychologists’ insights can improve the way economists are dealing with incentives.

We first survey economists’ recent developments on the relationship between incentives and motivation. We then present psychologists’ attempt to theorize those relationships (CET, SDT). We finally propose a theoretical framework that allows a more integrated framework for the understanding of the relationship between incentives and motivation in economics.