Social preferences and public economics: Mechanism design when social preferences depend on incentives

Social preferences such as altruism, reciprocity, intrinsic motivation and a desire to uphold ethical norms are essential to good government, often facilitating socially desirable allocations that would be unattainable by incentives that appeal solely to self-interest. But experimental and other evi...

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Bibliographic Details
Published in:Journal of public economics 2008-08, Vol.92 (8), p.1811-1820
Main Authors: Bowles, Samuel, Hwang, Sung-Ha
Format: Article
Language:English
Subjects:
Constitutions
Crowding-out effect
Economic incentives
Ethical norms
Ethics
Framing
Implementation theory
Incentive contracts
Incomplete contracts
Motivational crowding out
Preferences
Public goods
Social preferences
Social values
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Summary:Social preferences such as altruism, reciprocity, intrinsic motivation and a desire to uphold ethical norms are essential to good government, often facilitating socially desirable allocations that would be unattainable by incentives that appeal solely to self-interest. But experimental and other evidence indicates that conventional economic incentives and social preferences may be either complements or substitutes, explicit incentives crowding in or crowding out social preferences. We investigate the design of optimal incentives to contribute to a public good under these effects would make either more or less use of explicit incentives, by comparison to a naive planner who assumes they are absent.
ISSN:0047-2727
1879-2316
DOI:10.1016/j.jpubeco.2008.03.006