Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially
TL;DR: In this paper, the authors examined image motivation as a driver in prosocial behavior and asked whether extrinsic monetary incentives (do well) have a detrimental effect on prosocial behaviour due to crowding out of image motivation.
Abstract: This paper examines image motivation - the desire to be liked and well-regarded by others - as a driver in prosocial behavior (doing good), and asks whether extrinsic monetary incentives (doing well) have a detrimental effect on prosocial behavior due to crowding out of image motivation.By definition, image depends on one's behavior being visible to other people. Using this unique property we show that image is indeed an important part of the motivation to behave prosocially. Moreover, we show that extrinsic incentives interact with image motivation and are therefore less effective in public than in private. Together, these results imply that image motivation is crowded out by monetary incentives; this means that monetary incentives are more likely to be counterproductive for public prosocial activities than for private ones.
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TL;DR: In this paper, the authors build a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect, and analyze the equilibrium contracts offered by sponsors, including the level and confidentiality of incentives.
Abstract: We build a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. The presence of rewards or punishments creates doubt as to the true motive for which good deeds are performed, and this "overjustification effect" can result in a net crowding out of prosocial behavior by extrinsic incentives. The model also allows us to identify settings that are conducive to multiple social norms of behavior, and those where disclosing one's generosity may backfire. Finally, we analyze the equilibrium contracts offered by sponsors, including the level and confidentiality or publicity of incentives. Sponsor competition may cause rewards to bid down rather than up, and can even reduce social welfare by requiring agents to engage in inefficient sacrifices.
1,880 citations
TL;DR: In this article, the authors discuss how extrinsic incentives may come into conflict with other motivations and examine the research literature on three important examples in which monetary incentives have been used in a non-employment context to foster the desired behavior: education, increasing contributions to public goods, and helping people change their lifestyles, particularly with regard to smoking and exercise.
Abstract: First we discuss how extrinsic incentives may come into conflict with other motivations. For example, monetary incentives from principals may change how tasks are perceived by agents, with negative effects on behavior. In other cases, incentives might have the desired effects in the short term, but they still weaken intrinsic motivations. To put it in concrete terms, an incentive for a child to learn to read might achieve that goal in the short term, but then be counterproductive as an incentive for students to enjoy reading and seek it out over their lifetimes. Next we examine the research literature on three important examples in which monetary incentives have been used in a nonemployment context to foster the desired behavior: education; increasing contributions to public goods; and helping people change their lifestyles, particularly with regard to smoking and exercise. The conclusion sums up some lessons on when extrinsic incentives are more or less likely to alter such behaviors in the desired directions.
1,460 citations
Cites background from "Doing Good or Doing Well? Image Mot..."
...These channels illustrate possible behavioral effects of incentives and create implications for the design of incentives....
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TL;DR: In this paper, a simple experimental principal-agent game, where the principal decides whether or not to control the agent by implementing a minimum performance requirement before the agent chooses a productive activity, is studied.
Abstract: In this paper we analyze the behavioral consequences of control on motivation. Wenstudy a simple experimental principal-agent game, where the principal decides whethernhe controls the agent by implementing a minimum performance requirement before the agent chooses a productive activity. Our main finding is that a principal's decisionnto control has a negative impact on the agent's motivation. While there is substantial individual heterogeneity among agents, most agents reduce their performance as a response to the principals' controlling decision. The majority of the principals seem to anticipate the hidden costs of control and decide not to control. In several treatmentsnwe vary the enforceable level of control and show that control has a non-monotonic effect on the principal's payoff. In a variant of our main treatment principals can also set wages. In this gift-exchange game control partly crowds out agents' reciprocity. The economic importance and possible applications of our experimental results are further illustrated by a questionnaire study which reveals hidden costs of control in various real-life labor scenarios. We also explore possible reasons for the existence of hidden costs of control. Agents correctly believe that principals who control expect to get less than those who don't. When asked for their emotional perception of control, most agents who react negatively say that they perceive the controlling decision as a signal of distrust and a limitation of their choice autonomy.
1,014 citations
TL;DR: A door-to-door fund-raiser in which some households are informed about the exact time of solicitation with a flyer on their doorknobs is designed, finding that the flyer reduces the share of households opening the door by 9% to 25% and reduces giving by 28% to 42%.
Abstract: Every year, 90 percent of Americans give money or time to charities. Is such generosity necessarily welfare enhancing? We present a theoretical framework that pinpoints two types of motivation: individuals like to give, e.g., due to altruism or warm glow, or individuals would rather not give but dislike saying no, e.g., due to social pressure. To distinguish the two types of motivation, we design a door-to-door fund-raising drive in which we vary the ability of households to seek or avoid a solicitor. Some households are informed about the exact time of solicitation with a flyer on the door-knob; thus, they can seek the fund-raiser if giving is welfare-enhancing, and avoid it if giving is welfare-decreasing. We find that the flyer reduces the share of households opening the door by 10 to 25 percent, suggesting that the average household seeks to avoid fund-raisers. Moreover, if the flyer allows checking a box for ‘Do Not Disturb’ giving is 30 percent lower. The latter decrease is concentrated among donations smaller than $10. These findings suggest that both types of motivation affect charitable giving, with more evidence supporting the social pressure explanation. Combining reduced form insights from these treatments with data gathered from a complementary field experiment, we are able to structurally estimate altruism and social pressure parameters.
964 citations
TL;DR: In this article, the benefits, costs and limits of socially responsible behavior as a means to further societal goals are discussed for both individuals and firms, contrasting three possible understandings of the term: the adoption of a more long-term perspective by firms, the delegated exercise of prosocial behavior on behalf of stakeholders, and insider-initiated corporate philanthropy.
Abstract: Society’s demands for individual and corporate social responsibility as an alternative response to market and distributive failures are becoming increasingly prominent. We first draw on recent developments in the “psychology and economics” of prosocial behavior to shed light on this trend, which reflects a complex interplay of genuine altruism, social or self image concerns, and material incentives. We then link individual concerns to corporate social responsibility, contrasting three possible understandings of the term: the adoption of a more long-term perspective by firms, the delegated exercise of prosocial behavior on behalf of stakeholders, and insider-initiated corporate philanthropy. For both individuals and firms we discuss the benefits, costs and limits of socially responsible behavior as a means to further societal goals.
873 citations
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TL;DR: This paper developed a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect, and analyzed the socially optimal level of incentives and how monopolistic or competitive sponsors depart from it.
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 imagerelated) 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 the settings that are conducive to multiple social norms and more generally those that make individual actions complements or substitutes, which we show depends on whether stigma or honor is (endogenously) the dominant reputational concern. Finally, we analyze the socially optimal level of incentives and how monopolistic or competitive sponsors depart from it. Sponsor competition is shown to potentially reduce social welfare.
2,094 citations
TL;DR: The authors found that when the contract offers money the environment is perceived as monetary, and participants respond in a qualitatively different way in monetary and non-monetary environments in a set of experiments.
Abstract: Economics seems largely based on the assumption that monetary incentives improve performance. By contrast, a large literature in psychology, including a rich tradition of experimental work, claims just the opposite. In this paper we present and discuss a set of experiments designed to test the effect of different monetary compensations on performance. In our experiments we find that whenever money is offered, a larger amount yields a higher performance. It is not true, however, that offering money always induces a higher performance: participants who were offered a small payoff gave a worse performance than those who were offered no compensation at all. These results suggest that the behavior of participants is influenced by their perception of the contract that is offered to them. When the contract offers money the environment is perceived as monetary, and participants respond in a qualitatively different way in monetary and non-monetary environments. In a different set of experiments we test subjects who, acting as principals, have to provide the appropriate incentive to agents. We show that principals do not anticipate the drastic difference in behavior. The vast majority of principals seem to think incorrectly that a larger compensation is unambiguously a better incentive.
2,094 citations
Book•
28 Jun 1998
TL;DR: In this article, a wide-ranging discussion of personal movitation that opens out traditional eonomics to provide a more mature view of individuals as being sensitive to private and moral motives as well as market incentives is provided.
Abstract: This text provides a wide-ranging discussion of personal movitation that opens out traditional eonomics to provide a more mature view of individuals as being sensitive to private and moral motives as well as market incentives.
1,729 citations
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TL;DR: In this paper, the authors present the results of a field study in a group of day-care centers that contradicts the deterrence hypothesis that the introduction of a penalty that leaves everything else unchanged will reduce the occurrence of the behavior subject to the fine.
Abstract: The deterrence hypothesis predicts that the introduction of a penalty that leaves everything else unchanged will reduce the occurrence of the behavior subject to the fine. We present the result of a field study in a group of day‐care centers that contradicts this prediction. Parents used to arrive late to collect their children, forcing a teacher to stay after closing time. We introduced a monetary fine for late‐coming parents. As a result, the number of late‐coming parents increased significantly. After the fine was removed no reduction occurred. We argue that penalties are usually introduced into an incomplete contract, social or private. They may change the information that agents have, and therefore the effect on behavior may be opposite of that expected. If this is true, the deterrence hypothesis loses its predictive strength, since the clause “everything else is left unchanged” might be hard to satisfy.
1,721 citations
Posted Content•
TL;DR: In this paper, the authors present a theory which is derived from social psychology and focuses on the crowding-out of intrinsic motivation, which stipulates that intrin- intin-
Abstract: Twenty-six years ago, Richard M. Titmuss (1970) claimed that monetary compensation tends to undermine an individual’s sense of civic duty. He illustrated his claim with blood donations, contending that paying donors negatively affects their willingness to donate blood. This thesis attracted considerable attention. Among others, Robert S. Solow (1971) and Kenneth J. Arrow (1972) discussed the proposition, both assuming that the effects of price incentives can simply be addedto those of altruistic donation. Contrary to Titmuss, economists therefore generally predicted that if the price of bloodis raised, the total quantity offered would increase in accordance with a normal supply function of blood. This discussion subsided rather quickly because there was neither an analytical framework nor convincing empirical evidence to support Titmuss’s case. Today, new theoretical developments suggest that economists should considerpossible detrimental effects of using price incentives. In this paper, we present such a theory whichis derived from social psychology and focuses on the crowding-out of intrinsic motivation.It stipulates that intrin-
1,574 citations