Intentions for Doing Good Matter for Doing Well: The Negative Effects of Prosocial Incentives

Lea Cassar and Stephan Meier

The Economic Journal, 2021, vol. 131, issue 637, 1988-2017

Abstract: Many firms consider prosocial initiatives to be an effective tool to motivate workers. However, despite some initial supportive evidence, little is known about when and how prosocial incentives work. Our field experiment shows that the instrumental use of prosocial incentives to increase effort can backfire. The negative effect is particularly strong for performance-based prosocial incentives, which are, by construction, more instrumental than unconditional incentives, and for the workers who do not care about the charitable cause. These findings highlight some serious limitations of prosocial incentives: firms’ perceived intentions and the pool of employees will be crucial for their effectiveness.

Date: 2021
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