Accountability and learning with motivated agents

Abstract

Should accountability be introduced to organizations that are learning about the right policies to achieve their goals? I develop an agency model focusing on the interactions between accountability and an agent’s intrinsic motivation. More effort by the agent leads to more informative policy outcomes and thereby better policy learning. Holding the agent accountable for the policy outcomes motivates the agent and thus improves policy learning. However, by removing the agent from office upon policy failure and thereby taking away his benefit from learning through failure, accountability also discourages the agent. This negative effect is more substantial when the intrinsic motivation is higher. The principal, therefore, refrains from using accountability on the agent who is more intrinsically motivated.