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Incentives and Prosocial Behavior

  • Roland Bénabou
  • Jean Tirole

We develop a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. Rewards or punishments (whether material or image-related) create doubt about the true motive for which good deeds are performed and this "overjustification effect" can induce a partial or even net crowding out of prosocial behavior by extrinsic incentives. We also identify settings that are conducive to multiple social norms and those where disclosing one's generosity may backfire. Finally, we analyze the choice by public and private sponsors of incentive levels, their degree of confidentiality and the publicity given to agents' behavior. Sponsor competition is shown to potentially reduce social welfare.

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File URL: http://www.nber.org/papers/w11535.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11535.

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Date of creation: Aug 2005
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Publication status: published as Roland Bénabou & Jean Tirole, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
Handle: RePEc:nbr:nberwo:11535
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