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Continuous Preferences and Discontinuous Choices: How Altruists Respond to Incentives

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Author Info

  • Seabright Paul B

    ()
    (Toulouse School of Economics (IDEI, GREMAQ) and CEPR)

Abstract

This paper models two discontinuities that have been claimed to constitute important exceptions to the standard economic theory of human motivation. The first is a discontinuity in the distribution across population types of the willingness to accept payment in return for certain services such as giving blood, because such services given free are more worthwhile than when performed for payment. The second is that people who give services free may refuse to sell them for some positive price (this is known as crowding out). The paper models both phenomena when individuals act to signal their type in a two-period game with assortative matching. The former is the unique equilibrium of a signaling game in which individuals announce the prices at which they will perform a civic action. The latter may be observed as one of two equilibria of a screening game in which individuals have only a binary participation decision available to signal their type.

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File URL: http://www.degruyter.com/view/j/bejte.2009.9.1/bejte.2009.9.1.1346/bejte.2009.9.1.1346.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.

Volume (Year): 9 (2009)
Issue (Month): 1 (April)
Pages: 1-28

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Handle: RePEc:bpj:bejtec:v:9:y:2009:i:1:n:14

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Web page: http://www.degruyter.com

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Cited by:
  1. Friebel, Guido & Schnedler, Wendelin, 2007. "Team Governance: Empowerment or Hierarchical Control," CEPR Discussion Papers 6575, C.E.P.R. Discussion Papers.
  2. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A Preference-based Lucas Critique of Public Policy," CESifo Working Paper Series 2734, CESifo Group Munich.
  3. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A preference-Based Lucas Critique of Public Policy," UMASS Amherst Economics Working Papers 2009-11, University of Massachusetts Amherst, Department of Economics.
  4. Brandon C. Koford & Glenn C. Blomquist & David M. Hardesty & Kenneth R. Troske, 2012. "Estimating Consumer Willingness to Supply and Willingness to Pay for Curbside Recycling," Land Economics, University of Wisconsin Press, vol. 88(4), pages 745-763.
  5. Schnedler, Wendelin & Vanberg, Christoph, 2014. "Playing ‘hard to get’: An economic rationale for crowding out of intrinsically motivated behavior," European Economic Review, Elsevier, vol. 68(C), pages 106-115.

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