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When a Nudge Backfires:Using Observation with Social and Economic Incentives to Promote Pro-Social Behavior

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Listed:
  • Gary Bolton

    () (University of Texas at Dallas)

  • Eugen Dimant

    () (University of Pennsylvania)

  • Ulrich Schmidt

    () (Kiel Institute for the World Economy)

Abstract

Both theory and recent empirical evidence on nudging suggest that observability of behavior acts as an instrument for promoting (discouraging) pro-social (anti-social) behavior. Our study questions the universality of these claims. We employ a novel four-party setup to disentangle the roles that the relevant observational mechanisms play in affecting pro-/antisocial behavior. We systematically vary the observability of one's actions by others as well as the (non-)monetary relationship between observer and observee. Observability involving economic incentives crowds-out anti-social behavior in favor of more pro-social behavior. Surprisingly, observation without economic consequences fails to achieve any aggregate pro-social effect, and if anything it backfires. In additional experiments we confirm that this backfiring effect is driven by inequity concerns. We propose and successfully test a solution: increasing the focus on the underlying social norms.

Suggested Citation

  • Gary Bolton & Eugen Dimant & Ulrich Schmidt, 2019. "When a Nudge Backfires:Using Observation with Social and Economic Incentives to Promote Pro-Social Behavior," Discussion Papers 2019-03, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  • Handle: RePEc:not:notcdx:2019-03
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    1. repec:eee:joepsy:v:73:y:2019:i:c:p:66-88 is not listed on IDEAS

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    Keywords

    Anti-Social Behavior; Experiment; Nudge; Pro-Social Behavior; Reputation;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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