Incentives and Prosocial Behavior

45 Pages Posted: 19 Sep 2005 Last revised: 10 Jul 2022

See all articles by Roland Bénabou

Roland Bénabou

Princeton University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Jean Tirole

University of Toulouse 1 - Industrial Economic Institute (IDEI); University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ); Centre for Economic Policy Research (CEPR)

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Date Written: August 2005

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 settings that are conducive to multiple social norms and those where disclosing one's generosity may backfire. Finally, we analyze the choice by public and private sponsors of incentive levels, their degree of confidentiality and the publicity given to agents' behavior. Sponsor competition is shown to potentially reduce social welfare.

Suggested Citation

Bénabou, Roland and Tirole, Jean, Incentives and Prosocial Behavior (August 2005). NBER Working Paper No. w11535, Available at SSRN: https://ssrn.com/abstract=779945

Roland Bénabou (Contact Author)

Princeton University - Department of Economics ( email )

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Jean Tirole

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Centre for Economic Policy Research (CEPR)

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