Playing 'Hard to Get': An Economic Rationale for Crowding Out of Intrinsically Motivated Behavior

Wendelin Schnedler () and Christoph Vanberg
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Wendelin Schnedler: University of Paderborn

No 8108, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Anecdotal, empirical, and experimental evidence suggests that offering extrinsic rewards for certain activities can reduce people's willingness to engage in those activities voluntarily. We propose a simple rationale for this 'crowding out' phenomenon, using standard economic arguments. The central idea is that the potential to earn rewards in return for an activity may create incentives to play 'hard to get' in an effort to increase those rewards. We discuss two specific contexts in which such incentives arise. In the first, refraining from the activity causes others to attach higher value to it because it becomes scarce. In the second, restraint serves to conceal the actor's intrinsic motivation. In both cases, not engaging in the activity causes others to offer larger rewards. Our theory yields the testable prediction that such effects are likely to occur when a motivated actor enjoys a sufficient degree of 'market power.'

Keywords: behavioral economics; crowding out; intrinsic motivation; market power; hidden information (search for similar items in EconPapers)
JEL-codes: C9 D1 D4 D8 M5 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014-04
New Economics Papers: this item is included in nep-cbe, nep-cta, nep-exp, nep-hpe, nep-hrm and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in: European Economic Review, 2014, 68, 106–115

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Related works:
Journal Article: Playing ‘hard to get’: An economic rationale for crowding out of intrinsically motivated behavior (2014)
Working Paper: Playing 'Hard to Get': An Economic Rationale for Crowding Out of Intrinsically Motivated Behavior (2014)
Working Paper: Playing `Hard to Get': An Economic Rationale for Crowding Out of Intrinsically Motivated Behaviour (2014)
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