Incentives, Self-Selection, and Coordination of Motivated Agents for the Production of Social Goods

38 Pages Posted: 24 Jul 2021

See all articles by Kevin Bauer

Kevin Bauer

Leibniz Institute for Financial Research SAFE

Michael Kosfeld

Goethe University Frankfurt; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); University of Bonn - Center for Development Research (ZEF)

Ferdinand von Siemens

Goethe University Frankfurt; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 3 versions of this paper

Date Written: July 20, 2021

Abstract

We study, theoretically and empirically, the effects of incentives on the self-selection and coordination of motivated agents to produce a social good. Agents join teams where they allocate effort to either generate individual monetary rewards (selfish effort) or contribute to the production of a social good with positive effort complementarities (social effort). Agents differ in their motivation to exert social effort. Our model predicts that lowering incentives for selfish effort in one team increases social good production by selectively attracting and coordinating motivated agents. We test this prediction in a lab experiment allowing us to cleanly separate the selection effect from other effects of low incentives. Results show that social good production more than doubles in the low- incentive team, but only if self-selection is possible. Our analysis highlights the important role of incentives in the matching of motivated agents engaged in social good production.

Keywords: incentives, intrinsic motivation, self-selection, public service

JEL Classification: C91, D90, J24, J31, M52

Suggested Citation

Bauer, Kevin and Kosfeld, Michael and von Siemens, Ferdinand, Incentives, Self-Selection, and Coordination of Motivated Agents for the Production of Social Goods (July 20, 2021). SAFE Working Paper No. 318, Available at SSRN: https://ssrn.com/abstract=3890904 or http://dx.doi.org/10.2139/ssrn.3890904

Kevin Bauer (Contact Author)

Leibniz Institute for Financial Research SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

Michael Kosfeld

Goethe University Frankfurt ( email )

Faculty of Economics and Business Administration
Theodor-W.-Adorno-Platz 4
Frankfurt am Main, 60323
Germany

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

University of Bonn - Center for Development Research (ZEF) ( email )

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

Ferdinand Von Siemens

Goethe University Frankfurt ( email )

Faculty of Economics and Business Administration
Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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