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http://ssrn.com/abstract=1696888
 
 

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Social Norms and Economic Incentives in Firms


Steffen Huck


University College London - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA)

Dorothea Kübler


Social Science Research Center (WZB); Technical University of Berlin - Faculty of Economics and Management; Institute for the Study of Labor (IZA)

Jorgen W. Weibull


Boston University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)


IZA Discussion Paper No. 5264

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 different 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 incentive scheme. We also show how social norms can induce multiplicity of equilibria and how steeper economic incentives can reduce effort.

Number of Pages in PDF File: 28

Keywords: social norms, incentives, contracts

JEL Classification: D23

working papers series


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Date posted: October 25, 2010  

Suggested Citation

Huck, Steffen and Kübler, Dorothea and Weibull, Jorgen W., Social Norms and Economic Incentives in Firms. IZA Discussion Paper No. 5264. Available at SSRN: http://ssrn.com/abstract=1696888

Contact Information

Steffen Huck (Contact Author)
University College London - Department of Economics ( email )
Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 207 679 5895 (Phone)
+44 207 916 2774 (Fax)
HOME PAGE: http://www.ucl.ac.uk/~uctpshu/
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Dorothea F. Kübler
Social Science Research Center (WZB) ( email )
Reichpietschufer 50
D-10785 Berlin, 10785
Germany
40 30 25491440 (Phone)
HOME PAGE: http://www.wzb.eu/mp/vam/people/dorothea_kuebler.de.htm
Technical University of Berlin - Faculty of Economics and Management ( email )
D-10623 Berlin
Germany
+49 30 31425263 (Phone)
HOME PAGE: http://www.wiwi-experimente.tu-berlin.de/
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Jorgen W. Weibull
Boston University - Department of Economics ( email )
270 Bay State Road
Boston, MA 02215
United States
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
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