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Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes

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Author Info
Dirk Sliwka () (University of Cologne and IZA Bonn)

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Abstract

An explanation for motivation crowding-out phenomena is developed in a social preferences framework. Besides selfish and fair or altruistic types a third type of agents is introduced: These ‘conformists' have social preferences if they believe that sufficiently many of the others do too. When there is asymmetric information about the distribution of preferences (the `social norm'), the incentive scheme offered or autonomy granted can reveal a principal's beliefs about that norm. High-powered incentives may crowd out motivation as pessimism about the norm is conveyed. But by choosing fixed wages or granting autonomy the principal may signal trust in a favorable social norm.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2293.

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Length: 31 pages
Date of creation: Sep 2006
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Handle: RePEc:iza:izadps:dp2293

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Related research
Keywords: social preferences; incentives; intrinsic motivation; motivation crowding-out; social norms; trust; conformity; selection;

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Find related papers by JEL classification:
M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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References listed on IDEAS
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    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Philippe Batifoulier & Maryse Gadreau & Yves Arrighi & Yann Videau & Bruno Ventelou, 2009. "Disentangling extrinsic and intrinsic motivations: the case of French GPs dealing with prevention," EconomiX Working Papers 2009-15, University of Paris West - Nanterre la Défense, EconomiX. [Downloadable!]
  2. Lorenz Goette & Alois Stutzer, 2008. "Blood donations and incentives: evidence from a field experiment," Working Papers 08-3, Federal Reserve Bank of Boston. [Downloadable!]
    Other versions:
  3. Thomas Giebe & Oliver Gürtler, 2008. "Optimal Contracts for Lenient Supervisors," Discussion Papers 237, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  4. Maroš Servátka & Steven Tucker & Radovan Vadovic, 2008. "Words Speak Louder Than Money," Working Papers in Economics 08/18, University of Canterbury, Department of Economics. [Downloadable!]
  5. Adriani, Fabrizio & Sonderegger, Silvia, 2009. "Why do parents socialize their children to behave pro-socially? An information-based theory," MPRA Paper 16107, University Library of Munich, Germany. [Downloadable!]
  6. René Fahr, 2006. "The Wage Effects of Social Norms: Evidence of Deviations from Peers’ Body-Mass in Europe," IZA Discussion Papers 2323, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Anja Klaubert, 2009. "Being religious - A Question of Incentives?," Working Paper Series in Economics 118, University of Lüneburg, Institute of Economics. [Downloadable!]
  8. Dominique Demougin & Oliver Fabel & Christian Thomann, 2009. "Implicit vs. Explicit Incentives: Theory and a Case Study," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  9. Maroš Servátka & Steven Tucker & Radovan Vadovic, 2008. "Strategic Use of Trust," Working Papers in Economics 08/11, University of Canterbury, Department of Economics. [Downloadable!]
  10. Sung Ha Hwang & Samuel Bowles, 2008. "Is altruism bad for cooperation?," Working Papers 2008-13, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
  11. 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. [Downloadable!]
    Other versions:
  12. Ernst Fehr & Klaus M. Schmidt, 2007. "Adding a Stick to the Carrot? The Interaction of Bonuses and Fines," Discussion Papers 197, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
    Other versions:
  13. Shchetinin, Oleg, 2009. "Contracting Under Reciprocal Altruism," MPRA Paper 13457, University Library of Munich, Germany. [Downloadable!]
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