Discussion Paper Details

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Title: Incentives and Prosocial Behaviour

Author(s): Roland Bénabou and Jean Tirole

Publication Date: September 2004

Keyword(s): altruism, crowding out, D64, identity, motivation, overjustification effect, reputation, rewards, social norms and Z13

Programme Area(s): Industrial Organization and Public Economics

Abstract: We build a theory of prosocial behaviour that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. The presence of rewards or punishments creates doubt as to the true motive for which good deeds are performed, and this ?overjustification effect? can result in a net crowding out of prosocial behaviour by extrinsic incentives. The model also allows us to identify settings that are conducive to multiple social norms of behaviour, and those where disclosing one?s generosity may backfire. Finally, we analyse the equilibrium contracts offered by sponsors, including the level and confidentiality or publicity of incentives. Sponsor competition may cause rewards to bid down rather than up, and can even reduce social welfare by requiring agents to engage in inefficient sacrifices.

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Bibliographic Reference

Bénabou, R and Tirole, J. 2004. 'Incentives and Prosocial Behaviour'. London, Centre for Economic Policy Research.