When Galatea cares about her reputation: How having faith in your workers reduces their motivation to shine

We develop a theory of leadership that focuses on the role managers play in motivating employees through their attitudes towards employees. We model a managerʹs attitude as her perception about employeesʹ abilities of successfully completing challenging tasks. We show that a positive attitude motivates employees who are driven by monetary rewards. A negative attitude may motivate employees who are driven by concerns about their reputation for being able. When employees are driven by monetary rewards and care about their reputations, an increase in the reward for successfully completing challenging tasks may lead employees to shy away from these tasks.