Social Preferences and Public Economics: Mechanism Design when Social Preferences Depend on Incentives

Samuel Bowles () and Sung-Ha Hwang

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: Social preferences such as altruism, reciprocity, intrinsic motivation and a desire to uphold ethical norms are essential to good government, often facilitating socially desirable allocations that would be unattainable by incentives that appeal solely to self-interest. But experimental and other evidence indicates that conventional economic incentives and social preferences may be either complements or substitutes, explicit incentives crowding in or crowding out social preferences. We investigate the design of optimal incentives to contribute to a public good under these conditions. We identify cases in which a sophisticated planner cognizant of these non-additive effects would make either more or less use of explicit incentives, by comparison to a naive planner who assumes they are absent

Keywords: Social preferences; implementation theory; incentive contracts; incomplete contracts (search for similar items in EconPapers)
JEL-codes: D52 D64 H21 H41 (search for similar items in EconPapers)
Date: 2008-03
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-cta, nep-evo, nep-pbe and nep-soc
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Citations: View citations in EconPapers (109)

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Related works:
Journal Article: Social preferences and public economics: Mechanism design when social preferences depend on incentives (2008)
Working Paper: Social Preferences and Public Economics: Mechanism design when social preferences depend on incentives (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:530

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