Social Norms and Economic Incentives in Firms

Steffen Huck, Dorothea Kübler and Jörgen Weibull

No 5264, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper studies the interplay between economic incentives and social norms in firms. We introduce a general framework to model social norms arguing that norms stem from agents’ desire for, or peer pressure towards, social efficiency. In a simple model of team production we examine the interplay of different types of contracts with social norms. We show that one and the same norm can be output-increasing, neutral, or output-decreasing depending on the incentive scheme. We also show how social norms can induce multiplicity of equilibria and how steeper economic incentives can reduce effort.

Keywords: incentives; social norms; contracts (search for similar items in EconPapers)
JEL-codes: D23 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2010-10
New Economics Papers: this item is included in nep-cbe, nep-cta, nep-evo and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published - published in: Journal of Economic Behavior & Organization, 2012, 83 (2), 173-185

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Related works:
Journal Article: Social norms and economic incentives in firms (2012)
Working Paper: Social norms and economic incentives in firms (2012)
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