Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142386
Authors: 
Ali, S. Nageeb
Benabou, Roland
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 9947
Abstract: 
We analyze the costs and benefits of using social image to foster virtuous behavior. A Principal seeks to motivate reputation-conscious agents to supply a public good. Each agent chooses how much to contribute based on his own mix of public-spiritedness, private signal about the value of the public good, and reputational concern for appearing prosocial. By making individual behavior more visible to the community the Principal can amplify reputational payoffs, thereby reducing free-riding at low cost. Because societal preferences constantly evolve, however, she knows only imperfectly both the social value of the public good (which matters for choosing her own investment, matching rate or legal policy) and the importance attached by agents to social esteem and sanctions. Increasing publicity makes it harder for the Principal to learn from what agents do (the "descriptive norm") what they really value (the "prescriptive norm"), thus presenting her with a tradeoff between incentives and information aggregation. We derive the optimal degree of privacy/publicity and matching rate, then analyze how they depend on the economy's stochastic and informational structure. We show in particular that in a fast-changing society (greater variability in the fundamental or the image-motivated component of average preferences), privacy should generally be greater than in a more static one.
Subjects: 
social norms
privacy
transparency
incentives
esteem
reputation
shaming punishments
conformity
societal change
culture
JEL: 
D62
D64
D82
H41
K42
Z13
Document Type: 
Working Paper

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