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Social norms and economic incentives in firms

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  • Huck, Steffen
  • Kübler, Dorothea
  • Weibull, Jörgen

Abstract

This paper studies the interplay between economic incentives and social norms in firms. We introduce a general framework to model social norms arguing that norms stem from agents’ desire for, or peer pressure towards, social efficiency. In a simple model of team production we examine the interplay of three types of contracts with social norms. We show that one and the same norm can be output-increasing, neutral, or output-decreasing depending on the contract. Multiplicity of equilibria and crowding out effects of steeper incentives can arise.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 83 (2012)
Issue (Month): 2 ()
Pages: 173-185

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Handle: RePEc:eee:jeborg:v:83:y:2012:i:2:p:173-185

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Social norms; Crowding out; Contracts;

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Citations

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Cited by:
  1. Jocelyn Donze & Trude Gunnes, 2013. "Becoming “We” Instead of “I”, Identity Management and Incentives in the Workplace," Working Papers of BETA 2013-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  2. Weibull, Jörgen & Villa, Edgar, 2005. "Crime, punishment and social norms," Working Paper Series in Economics and Finance 610, Stockholm School of Economics.
  3. Danilov, Anastasia & Sliwka, Dirk, 2013. "Can Contracts Signal Social Norms? Experimental Evidence," IZA Discussion Papers 7477, Institute for the Study of Labor (IZA).
  4. Kuran,T. & Sandholm,W.H., 2002. "Cultural integration and its discontents," Working papers 20, Wisconsin Madison - Social Systems.
  5. 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.
  6. Aakvik, Arild & Hansen, Frank & Torsvik, Gaute, 2013. "Dynamic Peer Effects in Sales Teams," Working Papers in Economics 10/13, University of Bergen, Department of Economics.
  7. Blaufus, Kay & Bob, Jonathan & Otto, Philipp E., 2014. "The effect of tax privacy on tax compliance: An experimental investigation," arqus Discussion Papers in Quantitative Tax Research 164, arqus - Arbeitskreis Quantitative Steuerlehre.
  8. David, Gill & Rebecca, Stone, 2012. "Desert and inequity aversion in teams," MPRA Paper 36864, University Library of Munich, Germany.
  9. Ivanova-Stenzel, Radosveta & Kübler, Dorothea, 2005. "Courtesy and Idleness: Gender Differences in Team Work and Team Competition," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 91, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  10. Jan Tichem, 2013. "Endogenous Effort Norms in Hierarchical Firms," Tinbergen Institute Discussion Papers 13-198/VII, Tinbergen Institute.
  11. Patricia Crifo & Marc-Arthur Diaye, 2005. "The Composition of Compensation Policy: From Cash to Fringe Benefits," Working Papers hal-00243030, HAL.
  12. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.

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