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Incentives and Prosocial Behavior

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Author Info
Roland Bénabou () (Princeton University, CEPR, NBER and IZA Bonn)
Jean Tirole (Institut d’Economie Industrielle (IDEI), GREMAQ, CERAS and MIT)

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Abstract

We develop a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. Rewards or punishments (whether material or image-related) create doubt about the true motive for which good deeds are performed and this "overjustification effect" can induce a partial or even net crowding out of prosocial behavior by extrinsic incentives. We also identify settings that are conducive to multiple social norms and those where disclosing one’s generosity may backfire. Finally, we analyze the choice by public and private sponsors of incentive levels, their degree of confidentiality and the publicity given to agents’ behavior. Sponsor competition is shown to potentially reduce social welfare.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1695.

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Length: 46 pages
Date of creation: Jul 2005
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Handle: RePEc:iza:izadps:dp1695

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Related research
Keywords: altruism rewards motivation esteem crowding out overjustification effect identity social norms morals greed psychology

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Find related papers by JEL classification:
D64 - Microeconomics - - Welfare Economics - - - Altruism
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology

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References listed on IDEAS
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