Pride and Prejudice: The Human Side of Incentive Theory
Ellingsen, Tore, and
Magnus Johannesson. 2008. "Pride and Prejudice: The Human Side of Incentive Theory."
American Economic Review,
Desire for social esteem is a source of prosocial behavior. We develop a
model in which actors' utility of esteem depends on the audience. In a
principal agent setting, we show that the model can account for
motivational crowding out. Control systems and pecuniary incentives erode
morale by signaling to the agent that the principal is not worth
impressing. The model also offers an explanation for why agents are
motivated by unconditionally high pay and by mission-oriented principals.
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Ellingsen, Tore (Stockholm School of Economics)
Johannesson, Magnus (Stockholm School of Economics)
D82: Asymmetric and Private Information