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A Price Is a Signal: on Intrinsic Motivation, Crowding‐out, and Crowding‐in

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  • Friedel Bolle
  • Philipp E. Otto

Abstract

If a previously unpaid activity (e.g. donating blood) is paid, then we often observe that this activity is reduced. In this paper, it is hypothesized that the price offered is taken as a proxy for the “value” of the activity. Depending on how the actor valued the activity previously, crowding‐out or crowding‐in is implied, an effect with or without persistence after stopping the payment. The model can be adapted to a number of similar situations, including those where a high price signals high costs instead of high values. Our “naïve” explanation is confronted with Bènabou and Tirole's (2003) Principal‐Agent model. A questionnaire study supports our basic hypothesis as well as some of the derived consequences, and contradicts Bènabou and Tirole's model.

Suggested Citation

  • Friedel Bolle & Philipp E. Otto, 2010. "A Price Is a Signal: on Intrinsic Motivation, Crowding‐out, and Crowding‐in," Kyklos, Wiley Blackwell, vol. 63(1), pages 9-22, February.
    • Handle: RePEc:bla:kyklos:v:63:y:2010:i:1:p:9-22
    DOI: 10.1111/j.1467-6435.2010.00458.x
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bruno, Bruna, 2011. "Rewarding my Self. Self Esteem, Self Determination and Motivations," MPRA Paper 32218, University Library of Munich, Germany.
    2. Otto, Ilona M. & Wechsung, Frank, 2014. "The effects of rules and communication in a behavioral irrigation experiment with power asymmetries carried out in North China," Ecological Economics, Elsevier, vol. 99(C), pages 10-20.
    3. Antoine Beretti & Charles Figuières & Gilles Grolleau, 2013. "Using Money to Motivate Both ‘Saints’ and ‘Sinners’: a Field Experiment on Motivational Crowding-Out," Kyklos, Wiley Blackwell, vol. 66(1), pages 63-77, February.
    4. Kay Blaufus & Jonathan Bob & Philipp E. Otto & Nadja Wolf, 2017. "The Effect of Tax Privacy on Tax Compliance – An Experimental Investigation," European Accounting Review, Taylor & Francis Journals, vol. 26(3), pages 561-580, July.
    5. Bruno, B., 2010. "Rewarding my Self. The role of Self Esteem and Self Determination in Motivation Crowding Theory," MPRA Paper 23117, University Library of Munich, Germany.
    6. Joseph Lanfranchi & Mathieu Narcy, 2022. "How do prosocial motivation and performance‐related pay interact in the workplace context? Evidence from the non‐profit sector," Kyklos, Wiley Blackwell, vol. 75(3), pages 436-455, August.
    7. Zack Dorner & Emily Lancsar, 2017. "Intrinsic motivation, health outcomes and the crowding out effect of temporary extrinsic incentives: A lab-in-the-field experiment," Monash Economics Working Papers 18-17, Monash University, Department of Economics.
    8. Antoine Beretti & Charles Figuières & Gilles Grolleau, 2019. "How to turn crowding-out into crowding-in? An innovative instrument and some law-related examples," European Journal of Law and Economics, Springer, vol. 48(3), pages 417-438, December.
    9. Nikolai Botev, 2015. "Could Pronatalist Policies Discourage Childbearing?," Population and Development Review, The Population Council, Inc., vol. 41(2), pages 301-314, June.
    10. Cecere, Grazia & Mancinelli, Susanna & Mazzanti, Massimiliano, 2014. "Waste prevention and social preferences: the role of intrinsic and extrinsic motivations," Ecological Economics, Elsevier, vol. 107(C), pages 163-176.
    11. Giuseppe Lanza & Dario Maimone Ansaldo Patti & Pietro Navarra, 2020. "Can Citizens Affect the Performance of Their Elected Representatives? A Principal–Agent Model of Strategic Interaction in Democratic Systems," Mathematics, MDPI, vol. 8(7), pages 1-14, July.
    12. Winschel, Evguenia & Zahn, Philipp, 2014. "When ignorance is bliss : information asymmetries enhance prosocial behavior in dicator games," Working Papers 13-07, University of Mannheim, Department of Economics.
    13. Bruno, Bruna, 2012. "Reconciling economics and psychology on intrinsic motivation," MPRA Paper 42717, University Library of Munich, Germany.
    14. Egbert, Henrik & Greiff, Matthias, 2023. "Pay-What-You-Want für öffentliche Güter: Eine Fallstudie zu vhs.wissen live [Pay-What-You-Want and Public Goods: a case study of vhs.wissen live]," MPRA Paper 118432, University Library of Munich, Germany.
    15. Smith, Steven M., 2018. "Economic incentives and conservation: Crowding-in social norms in a groundwater commons," Journal of Environmental Economics and Management, Elsevier, vol. 90(C), pages 147-174.
    16. Winschel, Evguenia & Zahn, Philipp, 2012. "Effciency concern under asymmetric information," Working Papers 13-07, University of Mannheim, Department of Economics.

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