Monetary Incentives in Italian Public Administration: A Stimulus for Employees? An Agent-Based Approach

Abstract

The paper, focusing on the context of Public Administration (PA), addresses the effects of monetary incentives in employees’ performance. In the Italian PA, the monetary incentives are distributed according to the D.L.150/09 (i.e., the monetary incentives are divided among the employees according to the employees’ performance) which is based on the rank order tournament. The paper investigates if this mechanism has positive and sustainable impacts on the employees’ performance in the short, middle, and long term. The employees’ performance has been modeled as a function of ability and motivation. The results of the computational experiments show a positive impact of the monetary incentives, distributed according to merit criteria, on the employees’ performance in the short, middle, and long term.