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Incentives and Prosocial Behavior

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Author Info
Roland Bénabou (Princeton University, CEPR and NBER)
Jean Tirole (IDEI and GREMAQ, Toulouse, CERAS, Paris, and MIT)

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Abstract

We build a theory of prosocial behavior 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 behavior by extrinsic incentives. The model also allows us to identify settings that are conducive to multiple social norms of behavior, and those where disclosing one’s generosity may backfire. Finally, we analyze 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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Publisher Info
Paper provided by Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics. in its series Working Papers with number 137.

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Date of creation: Aug 2004
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Handle: RePEc:pri:wwseco:137

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Related research
Keywords: altruism rewards motivation overjustification effect crowding out identity social norms

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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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  15. Araújo, Aloísio Pessoa de & Moreira, Humberto Luiz Ataide & Gottlieb, Daniel, 2004. "A model of mixed signals with applications to countersignaling an the GED," Economics Working Papers (Ensaios Economicos da EPGE) 553, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
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