Another hidden cost of incentives: The detrimental effect on norm enforcement

Arbeitspapier

Monetary incentives are often considered as a way to foster contributions to public goods in society and firms. This paper investigates experimentally the effect of monetary incentives in the presence of a norm enforcement mechanism. Norm enforcement through peer punishment has been shown to be effective in raising contributions by itself. We test whether and how monetary incentives interact with punishment and how this in turn affects contributions. Our main findings are that free riders are punished less harshly in the treatment with incentives, and as a consequence, average contributions to the public good are no higher than without incentives. This finding ties to and extends previous research on settings in which monetary incentives may fail to have the desired effect.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Papers ; No. 09-2

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Design of Experiments: Laboratory, Group Behavior ; Organizational Behavior; Transaction Costs; Property Rights ; Public Goods
• Subject: public goods ; experimental economics ; norm enforcement ; hidden costs of incentives ; Normbefolgung ; Öffentliches Gut ; Trittbrettfahrerverhalten ; Anreizregulierung ; Soziales Verhalten ; Soziale Gruppe

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fuster, Andreas ; Meier, Stephan
• Event: Veröffentlichung
• (who): Federal Reserve Bank of Boston
• (where): Boston, MA
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/55597
• Last update: 10.03.2025, 11:45 AM CET