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Social norms and economic incentives in firms

Author

Listed:
  • Dorothea Kübler

    (Unknown)

  • Jörgen W. Weibull

    (Unknown)

  • Steffen Huck

    (Unknown)

Abstract

This paper studies the interplay between economic incentives and social norms in firms. We introduce a general framework to model social norms arguing that norms stem from agents' desire for, or peer pressure towards, social efficiency. In a simple model of team production we examine the interplay of three types of contracts with social norms. We show that one and the same norm can be output-increasing, neutral, or output-decreasing depending on the contract. Multiplicity of equilibria and crowding out effects of steeper incentives can arise.

Suggested Citation

  • Dorothea Kübler & Jörgen W. Weibull & Steffen Huck, 2012. "Social norms and economic incentives in firms," Post-Print hal-04299385, HAL.
    • Handle: RePEc:hal:journl:hal-04299385
    DOI: 10.1016/j.jebo.2012.05.005
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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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