On esteem-based incentives

Ali Mazyaki () and Joël van der Weele

International Review of Law and Economics, 2019, vol. 60, issue C

Abstract: The rise of the internet, increased connectivity and higher availability of personal data increases the relevance of incentives based on reputation and the allocation of esteem. However, their use is controversial: critics argue that shaming can lead to a loss of control over the size of the sanction and to mob justice. We use the signaling model of social behavior by Bénabou and Tirole (2011) to explore the effect of esteem-based incentives and their interaction with traditional fines. We show that the use of esteem and stigma can indeed lead to a loss of control by generating multiple equilibria, some of which feature high levels of compliance and high levels of stigma. Moreover, the deterrent effect of monetary and esteem incentives is interdependent. If both types of incentives are costly to implement, esteem incentives should optimally be used relatively more for rare behaviors and in societies that have more heterogeneous values.

Keywords: Legal sanctions; Signaling; Incentives; Reputation (search for similar items in EconPapers)
JEL-codes: D02 H41 K42 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0144818818302345
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:60:y:2019:i:c:s0144818818302345

DOI: 10.1016/j.irle.2019.06.001

Access Statistics for this article

International Review of Law and Economics is currently edited by C. Ott, A. W. Katz and H-B. Schäfer

More articles in International Review of Law and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().