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Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes

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Author Info
Dirk Sliwka

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Abstract

An explanation for motivation crowding-out phenomena is developed in a social preferences framework. Besides selfish and fair or altruistic types, a third type of agent is introduced. These "conformists" have social preferences if they believe that sufficiently many of the others do as well. When there is asymmetric information about the distribution of preferences (the "social norm"), the incentive scheme offered or autonomy granted can reveal a principal's beliefs about that norm. High-powered incentives may crowd out motivation as pessimism about the norm is conveyed. But by choosing fixed wages or granting autonomy, trust in a favorable norm may be signaled. (JEL D64, D82, J41, Z13)

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File URL: http://hdl.handle.net/10.1257/aer.97.3.999
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 97 (2007)
Issue (Month): 3 (June)
Pages: 999-1012
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Handle: RePEc:aea:aecrev:v:97:y:2007:i:3:p:999-1012

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References listed on IDEAS
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  37. Dirk Sliwka, 2006. "Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes," IZA Discussion Papers 2293, Institute for the Study of Labor (IZA). [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Goette, Lorenz & Stutzer, Alois, 2008. "Blood Donations and Incentives: Evidence from a Field Experiment," IZA Discussion Papers 3580, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. René Fahr, 2006. "The Wage Effects of Social Norms: Evidence of Deviations from Peers’ Body-Mass in Europe," IZA Discussion Papers 2323, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Sung Ha Hwang & Samuel Bowles, 2008. "Is altruism bad for cooperation?," Working Papers 2008-13, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
  4. Ernst Fehr & Klaus M. Schmidt, 2007. "Adding a Stick to the Carrot? The Interaction of Bonuses and Fines," Discussion Papers 197, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
    Other versions:
  5. Adriani, Fabrizio & Sonderegger, Silvia, 2009. "Why do parents socialize their children to behave pro-socially? An information-based theory," MPRA Paper 16107, University Library of Munich, Germany. [Downloadable!]
  6. Anja Klaubert, 2009. "Being religious - A Question of Incentives?," Working Paper Series in Economics 118, University of Lüneburg, Institute of Economics. [Downloadable!]
  7. Shchetinin, Oleg, 2009. "Contracting Under Reciprocal Altruism," MPRA Paper 13457, University Library of Munich, Germany. [Downloadable!]
  8. Philippe Batifoulier & Maryse Gadreau & Yves Arrighi & Yann Videau & Bruno Ventelou, 2009. "Disentangling extrinsic and intrinsic motivations: the case of French GPs dealing with prevention," EconomiX Working Papers 2009-15, University of Paris West - Nanterre la Défense, EconomiX. [Downloadable!]
  9. Thomas Giebe & Oliver Gürtler, 2008. "Optimal Contracts for Lenient Supervisors," Discussion Papers 237, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  10. Maroš Servátka & Steven Tucker & Radovan Vadovic, 2008. "Words Speak Louder Than Money," Working Papers in Economics 08/18, University of Canterbury, Department of Economics. [Downloadable!]
  11. Dirk Sliwka, 2007. "Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes," American Economic Review, American Economic Association, vol. 97(3), pages 999-1012, June. [Downloadable!]
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  12. Dominique Demougin & Oliver Fabel & Christian Thomann, 2009. "Implicit vs. Explicit Incentives: Theory and a Case Study," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  13. Maroš Servátka & Steven Tucker & Radovan Vadovic, 2008. "Strategic Use of Trust," Working Papers in Economics 08/11, University of Canterbury, Department of Economics. [Downloadable!]
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