Social Norms And Incentives Essay

%To summarise, in such an approach, rewards act like an increase in the noise/signal ratio or even a change in the sign of the signal, and the resulting crowding-out of the reputational (or self-image) motivation to participate can make the aggregate supply downward sloping over a wide range, with a possible sharp drop to zero. What are the implications of such an analysis of the interaction between incentives and social norms? First, material incentives such as prizes or the law are not very effective for eliciting admirable pro social behaviours, i.e. behaviours that are honour-driven: incentives indeed crowd out intrinsic motivation, especially for the most altruistic. Second, incentives are more effective to strengthen respectable behaviour, i.e. behaviour that is stigma-driven: incentives indeed …show more content…
For a given cost, it is possible to determine a critical value (cutoff point) in the distribution of intrinsic altruism in the population, above which people are willing to participate and under which people abstain. Honour is therefore defined as the average altruism of those above the cutoff (those who participate), while social stigma is represented by the average altruism of those below the cutoff (those who participate), while social stigma is represented by the average altruism of those below the cutoff (those who abstain). Now the impact of the introduction of a fixed incentive depends on whether the social/moral pressure to participate decreases or increases: when more people participate, the cutoff point shifts along the distribution of intrinsic altruism in such a way that honour declines but stigma becomes worse. Depending on whether honour or avoidance of stigma is the main driver of behaviour, social pressure to participate is likely to increase or