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Incentives and Prosocial Behaviour

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  • Bénabou, Roland
  • Tirole, Jean

Abstract

We build a theory of prosocial behaviour that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. The presence of rewards or punishments creates doubt as to the true motive for which good deeds are performed, and this ‘overjustification effect’ can result in a net crowding out of prosocial behaviour by extrinsic incentives. The model also allows us to identify settings that are conducive to multiple social norms of behaviour, and those where disclosing one’s generosity may backfire. Finally, we analyse the equilibrium contracts offered by sponsors, including the level and confidentiality or publicity of incentives. Sponsor competition may cause rewards to bid down rather than up, and can even reduce social welfare by requiring agents to engage in inefficient sacrifices.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4633.

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Date of creation: Sep 2004
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Handle: RePEc:cpr:ceprdp:4633

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Keywords: altruism; crowding out; D64; identity; motivation; overjustification effect; reputation; rewards; social norms; Z13;

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  1. One Nation: some scepticism
    by chris dillow in Stumbling and Mumbling on 2012-10-03 12:13:20
  2. Caution when applying impact evaluation lessons across contexts: the case of financial incentives for health workers
    by Jed Friedman in Development Impact on 2013-04-10 18:25:54
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