Pride and Prejudice: The Human Side of Incentive Theory

Tore Ellingsen and Magnus Johannesson

No 5768, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Many people are sensitive to social esteem, and their pride is a source of pro--social behavior. We present a game-theoretic model in which sensitivity to esteem varies across players and may depend on context as well players' beliefs about their opponents. For example, the pride associated with a generous image is greater when the player holding the image is in fact generous and believes the observers to be generous as well. The model can account both for the fact that players' behaviour sometimes depends on the opponents' unchosen options and for the prevalence of small symbolic gifts. Perhaps most importantly, the model offers an explanation for motivational crowding out: Control systems and pecuniary incentives may erode morale by signalling to the agent that the principal is not worth impressing.

Keywords: Motivational crowding out; Esteem; Incentives; Framing; Social preferences (search for similar items in EconPapers)
JEL-codes: D1 D23 D82 Z13 (search for similar items in EconPapers)
Date: 2006-07
New Economics Papers: this item is included in nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Journal Article: Pride and Prejudice: The Human Side of Incentive Theory (2008)
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