Chapter 12 Reinforcement Theory (543): Thorndkie’s law of effect states that a response followed by a reward is more likely to recur. Not rewarded, not likely. Emphasizes experience of award. Expectancy theory (543): theory that motivation is a function of valence, instrumentality, and expectancy. Belief that if you perform, you’ll be rewarded and you reward will be something of value to you. Agency theory (544): focuses on divergent interests & goals of org stakeholdesr & ways to use compensation to align interests. Is of partic value in compensation mgnmt bc of its emphasis on risk-reward trade-off (which company’s must consider diff compensation plans) Agency costs arise from principals/agents having diff goals, princ doesn’t know how well agency is pursuing & achieving prin’s goals. Principal (544): in agency theory, a person (owner for ex), who seeks to direct another’s behavior. In publicly traded comps, stakeholders=principal. Agent
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