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Social norms and economic incentives in firms

Dorothea Kübler, Jörgen Weibull and Steffen Huck
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Abstract: This paper studies the interplay between economic incentives and social norms in firms. We introduce a general framework to model social norms arguing that norms stem from agents' desire for, or peer pressure towards, social efficiency. In a simple model of team production we examine the interplay of three types of contracts with social norms. We show that one and the same norm can be output-increasing, neutral, or output-decreasing depending on the contract. Multiplicity of equilibria and crowding out effects of steeper incentives can arise.

Date: 2012-07
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Published in Journal of Economic Behavior and Organization, 2012, vol. 83 (N° 2), pp.173-185. ⟨10.1016/j.jebo.2012.05.005⟩

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Journal Article: Social norms and economic incentives in firms (2012) Downloads
Working Paper: Social Norms and Economic Incentives in Firms (2010) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04299385

DOI: 10.1016/j.jebo.2012.05.005

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