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Incentives and Anonymity Principle: Crowding Out Toward Users

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  • Patricia Crifo
  • Jean-Louis Rullière

Abstract

In our model, an agent produces an outcome by a costly effort and then distributes it among heterogeneous users. The agent’s payoff is the weighted sum of the users’ shares and the coefficient reflecting their heterogeneity. When the agent neglects users’ heterogeneity the game leads to an anonymous allocation. Otherwise, the equilibrium distribution is non- egalitarian but more efficient. Low performing agents reduce inequality among users by delivering an egalitarian service, while intermediate or high performing agents tend to prefer (but not always) delivering an unequal service, thereby breaking the anonymity principle. Incentives do matter regarding the crowding effect toward users.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1316.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1316

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Related research

Keywords: incentives; anonymity principle; egalitarian tasks allocation; principal agent user relationship; crowding-out effect;

References

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  1. Slivinski, Al, 2002. " Team Incentives and Organizational Form," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(2), pages 185-206.
  2. 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.
  3. Frey, Bruno S & Oberholzer-Gee, Felix, 1997. "The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out," American Economic Review, American Economic Association, vol. 87(4), pages 746-55, September.
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  5. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," American Economic Review, American Economic Association, vol. 94(2), pages 414-418, May.
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  7. Uri Gneezy & Aldo Rustichini, 2004. "Gender and competition at a young age," Framed Field Experiments 00151, The Field Experiments Website.
  8. Ernst Fehr & Simon Gaechter, . "Do Incentive Contracts Crowd out Voluntary Cooperation?," IEW - Working Papers 034, Institute for Empirical Research in Economics - University of Zurich.
  9. George J. Borjas, 2002. "The Wage Structure and the Sorting of Workers into the Public Sector," NBER Working Papers 9313, National Bureau of Economic Research, Inc.
  10. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1985. "Tournaments and Piece Rates: An Experimental Study," Working Papers 85-21, C.V. Starr Center for Applied Economics, New York University.
  11. Dirk Sliwka, 2003. "On the Hidden Costs of Incentive Schemes," Bonn Econ Discussion Papers bgse12_2003, University of Bonn, Germany.
  12. Bruno S. Frey & Reto Jegen, 2000. "Motivation Crowding Theory: A Survey of Empirical Evidence," CESifo Working Paper Series 245, CESifo Group Munich.
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