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Continuous Preferences and Discontinuous Choices: How Altruists Respond to Incentives

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  • Seabright Paul B

    () (Toulouse School of Economics (IDEI, GREMAQ) and CEPR)

Abstract

This paper models two discontinuities that have been claimed to constitute important exceptions to the standard economic theory of human motivation. The first is a discontinuity in the distribution across population types of the willingness to accept payment in return for certain services such as giving blood, because such services given free are more worthwhile than when performed for payment. The second is that people who give services free may refuse to sell them for some positive price (this is known as crowding out). The paper models both phenomena when individuals act to signal their type in a two-period game with assortative matching. The former is the unique equilibrium of a signaling game in which individuals announce the prices at which they will perform a civic action. The latter may be observed as one of two equilibria of a screening game in which individuals have only a binary participation decision available to signal their type.

Suggested Citation

  • Seabright Paul B, 2009. "Continuous Preferences and Discontinuous Choices: How Altruists Respond to Incentives," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-28, April.
  • Handle: RePEc:bpj:bejtec:v:9:y:2009:i:1:n:14
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    References listed on IDEAS

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    1. Robert Shimer & Lones Smith, 2000. "Assortative Matching and Search," Econometrica, Econometric Society, vol. 68(2), pages 343-370, March.
    2. Carl Mellström & Magnus Johannesson, 2008. "Crowding Out in Blood Donation: Was Titmuss Right?," Journal of the European Economic Association, MIT Press, vol. 6(4), pages 845-863, June.
    3. Dow, William H. & Philipson, Tomas, 1996. "An empirical examination of the implications of assortative matching on the incidence of HIV," Journal of Health Economics, Elsevier, vol. 15(6), pages 735-749, December.
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    7. Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
    8. Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
    9. Frey, Bruno S & Oberholzer-Gee, Felix & Eichenberger, Reiner, 1996. "The Old Lady Visits Your Backyard: A Tale of Morals and Markets," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1297-1313, December.
    10. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-877, October.
    11. Larry Samuelson & George J. Mailath & Avner Shaked, 2000. "Endogenous Inequality in Integrated Labor Markets with Two-Sided Search," American Economic Review, American Economic Association, vol. 90(1), pages 46-72, March.
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    Cited by:

    1. Auriol, Emmanuelle & Brilon, Stefanie, 2014. "Anti-social behavior in profit and nonprofit organizations," Journal of Public Economics, Elsevier, vol. 117(C), pages 149-161.
    2. Armin Falk, 2017. "Facing Yourself: A Note on Self-image," Working Papers 2017-048, Human Capital and Economic Opportunity Working Group.
    3. Friebel, Guido & Schnedler, Wendelin, 2011. "Team governance: Empowerment or hierarchical control," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 1-13.
    4. Schnedler, Wendelin & Vanberg, Christoph, 2014. "Playing ‘hard to get’: An economic rationale for crowding out of intrinsically motivated behavior," European Economic Review, Elsevier, vol. 68(C), pages 106-115.
    5. Dayé, Modeste, 2014. "Volunteering at the extensive margins in Developing Countries: Extrinsic or Intrinsic Motives?," MPRA Paper 59202, University Library of Munich, Germany, revised 10 Oct 2014.
    6. Brandon C. Koford & Glenn C. Blomquist & David M. Hardesty & Kenneth R. Troske, 2012. "Estimating Consumer Willingness to Supply and Willingness to Pay for Curbside Recycling," Land Economics, University of Wisconsin Press, vol. 88(4), pages 745-763.
    7. Goytom Abraha Kahsay & Workineh Asmare Kassie & Abebe Damte Beyene & Lars Gårn Hansen, 2017. "Do public works programs crowd-out pro-environmental behavior? Empirical evidence from food-for-work programs in Ethiopia," IFRO Working Paper 2017/13, University of Copenhagen, Department of Food and Resource Economics.
    8. Goytom Abraha Kahsay & Laura Mørch Andersen & Lars Gårn Hansen, 2014. "Price reactions when consumers are concerned about pro-social reputation," IFRO Working Paper 2014/09, University of Copenhagen, Department of Food and Resource Economics.
    9. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A preference-Based Lucas Critique of Public Policy," UMASS Amherst Economics Working Papers 2009-11, University of Massachusetts Amherst, Department of Economics.
    10. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A Preference-based Lucas Critique of Public Policy," CESifo Working Paper Series 2734, CESifo Group Munich.

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