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Title:Economic incentives and social preferences: A reference-based Lucas critique of public policy PDF Logo
Authors:Bowles, Samuel
PolanĂ­a Reyes, Sandra
Issue Date:2009
Series/Report no.:Working Paper, University of Massachusetts, Department of Economics 2009-11
Abstract:Policies and explicit incentives designed for self-regarding individuals sometimes are less effective or even counterproductive when they diminish altruism, ethical norms and other social preferences. Evidence from 51 experimental studies indicates that this crowding out effect is pervasive, and that crowding in also occurs. A model in which self-regarding and social preferences may be either substitutes or complements is developed and evidence for the mechanisms underlying this non-additivity feature of preferences is provided. The result is a preference-based analogue to the Lucas Critique restricting feasible implementation to allocations that are supportable given the effect of incentives on preferences.
Subjects:public goods
behavioral experiments
social preferences
second best
motivational crowding
explicit incentives
JEL:D64
H41
D78
Z13
Document Type:Working Paper
Appears in Collections:Working Papers, Department of Economics, University of Massachusetts

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