Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes

No 2293, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: An explanation for motivation crowding-out phenomena is developed in a social preferences framework. Besides selfish and fair or altruistic types a third type of agents is introduced: These ‘conformists' have social preferences if they believe that sufficiently many of the others do too. When there is asymmetric information about the distribution of preferences (the `social norm'), the incentive scheme offered or autonomy granted can reveal a principal's beliefs about that norm. High-powered incentives may crowd out motivation as pessimism about the norm is conveyed. But by choosing fixed wages or granting autonomy the principal may signal trust in a favorable social norm.

Keywords: social preferences; incentives; intrinsic motivation; motivation crowding-out; social norms; trust; conformity; selection (search for similar items in EconPapers)
JEL-codes: M52 J33 D23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-knm and nep-soc
Date: 2006-09
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Related works:
Journal Article: Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes (2007)
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