Motivation Crowding Theory: A Survey of Empirical Evidence

26 Pages Posted: 30 Apr 2000

See all articles by Bruno S. Frey

Bruno S. Frey

CREMA; University of Basel

Reto Jegen

University of Zurich - Department of Economics

Date Written: January 2000


The motivation crowding effect suggests that an external intervention via monetary incentives or punishments may undermine (and under different indentifiable conditions strengthen) intrinsic motivation. As of today, the theoretical possibility of crowding effects is widely accepted among economists. Many of them, however, have been critical about its empirical relevance. This survey shows that such scepticism is unwarranted and that there exists indeed compelling empirical evidence for the existence of crowding out and crowding in. It is based on circumstantial insight, laboratory studies by both psychologists and economists as well as field research by econometric studies. The presented pieces of evidence refer to a wide variety of areas of the economy and society and have been collected for many different countries and periods. Crowding effects thus are an empirically relevant phenomenon, which can, in specific cases, even dominate the traditional relative price effect.

Keywords: Crowding Effect, Intrinsic Motivation, Principal-Agent Theory, Economic Psychology, Experiments

JEL Classification: A12, J33, L22

Suggested Citation

Frey, Bruno S. and Jegen, Reto, Motivation Crowding Theory: A Survey of Empirical Evidence (January 2000). Available at SSRN: or

Bruno S. Frey

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002

Reto Jegen (Contact Author)

University of Zurich - Department of Economics ( email )

Zuerich, 8006
+41 1 63 43795 (Phone)

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