Incentives and Prosocial Behavior
- (pp. 1652-1678)
Abstract
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 the settings that are conducive to multiple social norms and, more generally, those that make individual actions complements or substitutes, which we show depends on whether stigma or honor is (endogenously) the dominant reputational concern. Finally, we analyze the socially optimal level of incentives and how monopolistic or competitive sponsors depart from it. Sponsor competition is shown to potentially reduce social welfare. (JEL D11, D64, D82, Z13)Citation
Bénabou, Roland, and Jean Tirole. 2006. "Incentives and Prosocial Behavior." American Economic Review, 96 (5): 1652-1678. DOI: 10.1257/aer.96.5.1652JEL Classification
- D11 Consumer Economics: Theory
- D64 Altruism; Philanthropy
- D82 Asymmetric and Private Information; Mechanism Design
- Z13 Economic Sociology; Economic Anthropology; Social and Economic Stratification