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Crowding-in, crowding-out and over-crowding: The interaction between price and quantity based instruments and intrinsic motivation

  • Grischa Perino

    (School of Economics and CBESS, University of East Anglia)

  • Luca A. Panzone

    (Sustainable Consumption Institute,University of Manchester (UK) and University College London (UK))

  • Timothy Swanson

    (Centre for International Environmental Studies, Graduate Institute of International and Development Studies, Geneva)

We conduct a field experiment involving real purchasing decisions in a large supermarket chain to test the effect of different regulatory interventions aiming to induce a more climateâ€friendly diet on intrinsic motivation. Focusing on shoppers who prefer the dirty variety, we compare labeling, a subsidy, a product ban and neutrally framed versions of the latter two in their ability to induce shoppers to switch to cleaner varieties. Carbon footprint labels and bans activate intrinsic motivation of shoppers (crowdingâ€in). Remarkably, a subsidy framed as an explicit intervention is less effective than both a label and an equivalent but neutrally framed price change. The effects of information and changes in relative prices are not only not additive (crowdingâ€out) but combined perform worse than each individually (overâ€crowding). We therefore find markedly different effects of price and quantity based instruments on intrinsic motivation.

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Paper provided by School of Economics, University of East Anglia, Norwich, UK. in its series Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) with number 11-10.

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Date of creation: 01 Mar 2011
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Handle: RePEc:uea:wcbess:11-10
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  1. Ellingsen, Tore & Johannesson, Magnus, 2006. "Pride and Prejudice: The Human Side of Incentive Theory," CEPR Discussion Papers 5768, C.E.P.R. Discussion Papers.
  2. Michael Kosfeld & Armin Falk, 2006. "The Hidden Costs of Control," American Economic Review, American Economic Association, vol. 96(5), pages 1611-1630, December.
  3. Uri Gneezy & Aldo Rustichini, 2000. "Pay Enough Or Don'T Pay At All," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 791-810, August.
  4. Montero, Juan-Pablo, 2002. "Prices versus quantities with incomplete enforcement," Journal of Public Economics, Elsevier, vol. 85(3), pages 435-454, September.
  5. Timo Goeschl & Grischa Perino, 2009. "Instrment choice and motivation: Evidence from a climate change experiment," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 09-05, School of Economics, University of East Anglia, Norwich, UK..
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