Incentives and prosocial behavior

Roland Bénabou*, Jean Tirole

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1118 Scopus citations

Abstract

We develop a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. Rewards or punishments (whether material or image-related) create doubt about the true motive for which good deeds are performed, and this "overjustification effect" can induce a partial or even net crowding out of prosocial behavior by extrinsic incentives. We also identify the settings that are conducive to multiple social norms and, more generally, those that make individual actions complements or substitutes, which we show depends on whether stigma or honor is (endogenously) the dominant reputational concern. Finally, we analyze the socially optimal level of incentives and how monopolistic or competitive sponsors depart from it. Sponsor competition is shown to potentially reduce social welfare.

Original languageEnglish (US)
Pages (from-to)1652-1678
Number of pages27
JournalAmerican Economic Review
Volume96
Issue number5
DOIs
StatePublished - Dec 2006

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Incentives and prosocial behavior'. Together they form a unique fingerprint.

Cite this