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Another hidden cost of incentives: the detrimental effect on norm enforcement

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  • Andreas Fuster
  • Stephan Meier

Abstract

Monetary incentives are often considered as a way to foster contributions to public goods in society and firms. This paper investigates experimentally the effect of monetary incentives in the presence of a norm enforcement mechanism. Norm enforcement through peer punishment has been shown to be effective in raising contributions by itself. We test whether and how monetary incentives interact with punishment and how this in turn affects contributions. Our main findings are that free riders are punished less harshly in the treatment with incentives, and as a consequence, average contributions to the public good are no higher than without incentives. This finding ties to and extends previous research on settings in which monetary incentives may fail to have the desired effect.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Boston in its series Working Papers with number 09-2.

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Date of creation: 2009
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Handle: RePEc:fip:fedbwp:09-2

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Keywords: Human behavior ; Social choice;

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Cited by:
  1. Mirco Tonin & Michael Vlassopoulos, 2013. "Social Incentives Matter: Evidence from an Online Real Effort Experiment," Working Papers 2013.05, Fondazione Eni Enrico Mattei.
  2. Xiao, Erte, 2013. "Profit-seeking punishment corrupts norm obedience," Games and Economic Behavior, Elsevier, vol. 77(1), pages 321-344.
  3. Marco Faillo & Daniela Grieco & Luca Zarri, 2010. "Legitimate Punishment, Feedback, and the Enforcement of Cooperation," Working Papers 16/2010, University of Verona, Department of Economics.
  4. Matthew W. McCarter & Anya C. Samak & Roman M. Sheremeta, 2013. "Divided Loyalties or Conditional Cooperation? An experimental study of contributions to multiple public goods," Working Papers 13-08, Chapman University, Economic Science Institute.
  5. Xiaofei Pan & Daniel Houser, 2011. "Social Approval, Competition, and Cooperation," Levine's Working Paper Archive 786969000000000299, David K. Levine.
  6. Sander Onderstal & Arthur J.C. Schram & Adriaan R. Soetevent, 2011. "Bidding to give in the Field: Door-to-Door Fundraisers had it right from the Start," Tinbergen Institute Discussion Papers 11-070/1, Tinbergen Institute, revised 10 Nov 2011.
  7. Samuel Ferey & Yannick Gabuthy & Nicolas Jacquemet, 2013. "L'apport de l'économie expérimentale dans l'élaboration des politiques publiques," Post-Print halshs-00879205, HAL.
  8. Roland Benabou & Jean Tirole, 2011. "Laws and Norms," NBER Working Papers 17579, National Bureau of Economic Research, Inc.
  9. Onderstal, Sander & Schram, Arthur J.H.C. & Soetevent, Adriaan R., 2013. "Bidding to give in the field," Journal of Public Economics, Elsevier, vol. 105(C), pages 72-85.
  10. Paul Dolan & Robert Metcalfe, 2013. "Neighbors, knowledge, and nuggets: two natural field experiments on the role of incentives on energy conservation," LSE Research Online Documents on Economics 51563, London School of Economics and Political Science, LSE Library.
  11. Thomas A. Rietz & Eric Schniter & Roman M. Sheremeta & Timothy W. Shields, 2011. "Trust, Reciprocity and Rules," Working Papers 11-06, Chapman University, Economic Science Institute.
  12. Weng, Qian & Carlsson, Fredrik, 2013. "Cooperation in teams: the role of identity, punishment and endowment distribution," Working Papers in Economics 551, University of Gothenburg, Department of Economics.
  13. Sander Onderstal & Arthur J.C. Schram & Adriaan R. Soetevent, 2011. "Bidding to give in the Field: Door-to-Door Fundraisers had it right from the Start," Tinbergen Institute Discussion Papers 11-070/1, Tinbergen Institute, revised 10 Nov 2011.

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