On Esteem-Based Incentives

Tinbergen Institute Discussion Paper 2018/043-I

28 Pages Posted: 30 May 2018 Last revised: 22 Nov 2019

See all articles by Ali Mazyaki

Ali Mazyaki

Department of Economics; Allameh Tabataba'i University; Department of Economics; Institute for Management and Planning Studies

Joel J. van der Weele

University of Amsterdam - Center for Experimental Economics and political Decision making (CREED); Tinbergen Institute; Center for Financial Studies (CFS)

Multiple version iconThere are 2 versions of this paper

Date Written: May 5, 2018

Abstract

Incentives based on esteem, honor and shame are increasingly popular and easy to use due to modern surveillance techniques. However, the use of shaming is controversial: critics argue that delegating punishment to a crowd can lead to mob justice and a loss of control over the size of the sanction. We use the signaling model of social behavior by Bénabou and Tirole (2011) to explore the effect of esteem-based incentives and their interaction with traditional monetary incentives. We show that esteem-based incentives can indeed lead to a loss of control by generating multiple equilibria, some of which feature high levels of stigma. Monetary and esteem incentives are interdependent. Moreover, if both types of incentives are costly to implement, the optimal incentive mix includes both instruments. In equilibrium, esteem-based incentives will be used relatively more for rare behaviors and in societies that have more heterogenous values.

Keywords: prosocial behavior, signaling, incentives, esteem

JEL Classification: D02, H41, K42

Suggested Citation

Mazyaki, Ali and van der Weele, Joel J., On Esteem-Based Incentives (May 5, 2018). Tinbergen Institute Discussion Paper 2018/043-I. Available at SSRN: https://ssrn.com/abstract=3173555 or http://dx.doi.org/10.2139/ssrn.3173555

Ali Mazyaki (Contact Author)

Department of Economics; Allameh Tabataba'i University ( email )

Shahid Beheshti,
Tehran
Iran

HOME PAGE: http://en.atu.ac.ir/

Department of Economics; Institute for Management and Planning Studies ( email )

No. 6, Jamal Abad, Niavaran Square
Tehran, Tehran
Iran

Joel J. Van der Weele

University of Amsterdam - Center for Experimental Economics and political Decision making (CREED) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

HOME PAGE: http://https://sites.google.com/site/joelvdweele/

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Center for Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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