Psychological Foundations of Incentives

Ernst Fehr and Armin Falk

No 3185, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: During the last two decades economists have made much progress in understanding incentives, contracts and organizations. Yet, they constrained their attention to a very narrow and empirically questionable view of human motivation. The purpose of this Paper is to show that this narrow view of human motivation may severely limit understanding the determinants and effects of incentives. Economists may fail to understand the levels and the changes in behaviour if they neglect motives like the desire to reciprocate or the desire to avoid social disapproval. We show that monetary incentives may backfire and reduce the performance of agents or their compliance with rules. In addition, these motives may generate very powerful incentives themselves.

Keywords: Incentives; Contracts; Reciprocity; Social approval; Social norms; Intrinsic motivation (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (480)

Downloads: (external link)
https://cepr.org/publications/DP3185 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Psychological foundations of incentives (2002)
Working Paper: Psychological Foundations of Incentives (2002)
Working Paper: Psychological Foundations of Incentives (2002)
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:cpr:ceprdp:3185

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP3185

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().