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Incentives and Prosocial Behavior

Jean Tirole and Roland J. Benabou ()

American Economic Review, 2006, vol. 96, issue 5, pages 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)

Date: 2006
Note: DOI: 10.1257/aer.96.5.1652
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Working Paper: Incentives and Prosocial Behavior (2006) Downloads
Working Paper: Incentives and Prosocial Behavior (2005) Downloads
Working Paper: Incentives and Prosocial Behavior (2005) Downloads
Working Paper: Incentives and Prosocial Behaviour (2004) Downloads
Working Paper: Incentives and Prosocial Behavior (2004) Downloads
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