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Playing `Hard to Get': An Economic Rationale for Crowding Out of Intrinsically Motivated Behaviour

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  • Wendelin Schnedler
  • Christoph Vanberg

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Abstract

Anecdotal, empirical, and experimental evidence suggests that offering extrinsic rewards for certain activities can reduce people's willingness to engage in those activities voluntarily. We propose a simple rationale for this `crowding out' phenomenon, using standard economic arguments. The central idea is that the potential to earn rewards in return for an activity may create incentives to play `hard to get' in an effort to increase those rewards. We discuss two specific contexts in which such incentives arise. In the first, refraining from the activity causes others to attach higher value to it because it becomes scarce. In the second, restraint serves to conceal the actor's intrinsic motivation. In both cases, not engaging in the activity causes others to offer larger rewards. Our theory yields the testable prediction that such effects are likely to occur when a motivated actor enjoys a sufficient degree of `market power'.

Suggested Citation

  • Wendelin Schnedler & Christoph Vanberg, 2014. "Playing `Hard to Get': An Economic Rationale for Crowding Out of Intrinsically Motivated Behaviour," The Centre for Market and Public Organisation 14/320, Department of Economics, University of Bristol, UK.
  • Handle: RePEc:bri:cmpowp:14/320
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    References listed on IDEAS

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    Cited by:

    1. Arcand, Jean-Louis & Wagner, Natascha, 2016. "Does Community-Driven Development Improve Inclusiveness in Peasant Organizations? – Evidence from Senegal," World Development, Elsevier, vol. 78(C), pages 105-124.
    2. Müller, Stephan & Rau, Holger A., 2018. "Motivational crowding out effects in charitable giving: Experimental evidence," Center for European, Governance and Economic Development Research Discussion Papers 338, University of Goettingen, Department of Economics.

    More about this item

    Keywords

    intrinsic motivation; crowding out; behavioural economics; market power; hidden information;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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