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Motivation Crowding Theory: A Survey Of Empirical Evidence, Revised Version

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Bruno S. Frey
Reto Jegen

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Abstract

The Motivation Crowding Effect suggests that external intervention via monetary incentives punishments may undermine, and under different identifiable conditions strengthen, intrinsic motivation. As of today, the theoretical possibility of motivation crowding has been the main subject of discussion among economists. This study demonstrates that the effect is also of empirical relevance. There exist a large number of studies, offering empirical evidence in support of the existence of crowding-out crowding-in exists. The study is based on circumstantial evidence, laboratory studies by both psychologists and economists, as well as field research by econometric studies. The pieces of evidence presented refer to a wide variety of areas of the economy and society and have been collected for many different countries and periods of time. Crowding effects thus are an empirically relevant phenomenon, which can, in specific cases, even dominate the traditional relative price effect.

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Paper provided by Institute for Empirical Research in Economics - IEW in its series IEW - Working Papers with number iewwp049.

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Handle: RePEc:zur:iewwpx:049

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Related research
Keywords: Crowding effect; intrinsic motivation; principal-agent theory; economic psychology; experiments;

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Find related papers by JEL classification:
A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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  1. Josef Falkinger et al., 2000. "A Simple Mechanism for the Efficient Provision of Public Goods: Experimental Evidence," American Economic Review, American Economic Association, vol. 90(1), pages 247-264, March. [Downloadable!] (restricted)
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  2. Armin Falk & Ernst Fehr & Urs Fischbacher, . "On the Nature of Fair Behavior," IEW - Working Papers iewwp017, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  3. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers iewwp004, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  4. Ernst Fehr & Peter K. Zych, . "Intertemporal Choice under Habit Formation," IEW - Working Papers iewwp043, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  5. Bruno S. Frey & Lorenz Goette, . "Does Pay Motivate Volunteers?," IEW - Working Papers iewwp007, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  6. Bruno S. Frey & Marcel Kucher & Alois Stutzer, . "Outcome, Process & Power in Direct Democracy," IEW - Working Papers iewwp025, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  7. Ernst Fehr & Jean-Robert Tyran, 2001. "Does Money Illusion Matter?," American Economic Review, American Economic Association, vol. 91(5), pages 1239-1262, December. [Downloadable!] (restricted)
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  8. Josef Zweimueller & Rudolf Winter-Ebmer, . "Firm-specific Training: Consequences for Job Mobility," IEW - Working Papers iewwp037, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  9. Lalive, Rafael & van Ours, Jan C. & Zweimüller, Josef, 2000. "The Impact of Active Labor Market Programs and Benefit Entitlement Rules on the Duration of Unemployment," IZA Discussion Papers 149, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Bruno S. Frey & Alois Stutzer, . "Maximising Happiness?," IEW - Working Papers iewwp022, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  11. Frey, Bruno S. & Stutzer, Alois, 2000. "Happiness, Economy and Institutions," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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