Incentives and Prosocial Behavior
2006/11/01 by Roland Bénabou, Jean Tirole · 3,305 citations
Decision Sciences · Psychology · Social Sciences · #Altruism (biology) #Competition (biology) #Crowding #Crowding out #Culture, Economy, and Development Studies #Economics #Experimental Behavioral Economics Studies #Game Theory and Applications #Incentive #Law #Market economy #Microeconomics #Monetary economics #Monopolistic competition #Monopoly #Political science #Prosocial behavior #Psychology #Public economics #Reputation #Social Welfare #Social preferences #Social psychology #Welfare
paper · doi:10.1257/aer.96.5.1652
published in American Economic Review 96(5), 1652-1678 (American Economic Association)
openalex publication_date 2006/11/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/05
Abstract
We develop a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. Rewards or punishments (whether material or image-related) create doubt about the true motive for which good deeds are performed, and this “overjustification effect” can induce a partial or even net crowding out of prosocial behavior by extrinsic incentives. We also identify the settings that are conducive to multiple social norms and, more generally, those that make individual actions complements or substitutes, which we show depends on whether stigma or honor is (endogenously) the dominant reputational concern. Finally, we analyze the socially optimal level of incentives and how monopolistic or competitive sponsors depart from it. Sponsor competition is shown to potentially reduce social welfare.
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