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Title:Social preferences and public economics: Mechanism design when social preferences depend on incentives PDF Logo
Authors:Bowles, Samuel
Hwang, Sung-Ha
Issue Date:2008
Series/Report no.:Working Paper, University of Massachusetts, Department of Economics 2008-06
Abstract: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 conditions. We identify cases in which a sophisticated planner cognizant of these non-additive effects would make either more or less use of explicit incentives, by comparison to a naive planner who assumes they are absent.
Subjects:social preferences
implementation theory
incentive contracts
incomplete contracts
framing
motivational crowding out
ethical norms
constitutions
JEL:D52
D64
H21
H41
Document Type:Working Paper
Appears in Collections:Working Papers, Department of Economics, University of Massachusetts

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