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Psychological Foundations of Incentives

Author(s) / Creator(s)

Fehr, Ernst
Falk, Armin

Abstract / Description

During the last two decades economists have made much progress in understanding incentives, contracts and organisations. Yet, they constrained their attention to a very narrow and empirically questionable view of human motivation. The purpose of this paper is to show that this narrow view of human motivation may severely limit understanding the determinants and effects of incentives. Economists may fail to understand the levels and the changes in behaviour if they neglect motives like the desire to reciprocate or the desire to avoid social disapproval. We show that monetary incentives may backfire and reduce the performance of agents or their compliance with rules. In addition, these motives may generate very powerful incentives themselves.

Keyword(s)

Anreiz Vereinbarung Reziprozität Soziale Anerkennung Norm Motivation Anreiz Vereinbarung Reziprozität Soziale Anerkennung Norm Motivation incentives contracts reciprocity social approval social norms intrinsic motivation

Persistent Identifier

Date of first publication

2002

Is part of series

Forschungsinstitut zur Zukunft der Arbeit/ Institute for the Study of Labor: IZA Discussion Paper Series;507

Citation

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  • Author(s) / Creator(s)
    Fehr, Ernst
  • Author(s) / Creator(s)
    Falk, Armin
  • PsychArchives acquisition timestamp
    2022-11-17T11:02:44Z
  • Made available on
    2008-06-30
  • Made available on
    2015-12-01T10:32:14Z
  • Made available on
    2022-11-17T11:02:44Z
  • Date of first publication
    2002
  • Abstract / Description
    During the last two decades economists have made much progress in understanding incentives, contracts and organisations. Yet, they constrained their attention to a very narrow and empirically questionable view of human motivation. The purpose of this paper is to show that this narrow view of human motivation may severely limit understanding the determinants and effects of incentives. Economists may fail to understand the levels and the changes in behaviour if they neglect motives like the desire to reciprocate or the desire to avoid social disapproval. We show that monetary incentives may backfire and reduce the performance of agents or their compliance with rules. In addition, these motives may generate very powerful incentives themselves.
    en
  • Persistent Identifier
    https://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:bsz:291-psydok-16833
  • Persistent Identifier
    https://hdl.handle.net/20.500.11780/1133
  • Persistent Identifier
    https://doi.org/10.23668/psycharchives.8957
  • Language of content
    eng
  • Is part of
    IZA Discussion Paper Series No. 507
  • Is part of series
    Forschungsinstitut zur Zukunft der Arbeit/ Institute for the Study of Labor: IZA Discussion Paper Series;507
  • Keyword(s)
    Anreiz
    de
  • Keyword(s)
    Vereinbarung
    de
  • Keyword(s)
    Reziprozität
    de
  • Keyword(s)
    Soziale Anerkennung
    de
  • Keyword(s)
    Norm
    de
  • Keyword(s)
    Motivation
    de
  • Keyword(s)
    Anreiz
    de
  • Keyword(s)
    Vereinbarung
    de
  • Keyword(s)
    Reziprozität
    de
  • Keyword(s)
    Soziale Anerkennung
    de
  • Keyword(s)
    Norm
    de
  • Keyword(s)
    Motivation
    de
  • Keyword(s)
    incentives
    en
  • Keyword(s)
    contracts
    en
  • Keyword(s)
    reciprocity
    en
  • Keyword(s)
    social approval
    en
  • Keyword(s)
    social norms
    en
  • Keyword(s)
    intrinsic motivation
    en
  • Dewey Decimal Classification number(s)
    150
  • Title
    Psychological Foundations of Incentives
    en
  • DRO type
    report
  • Visible tag(s)
    PsyDok