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Social norms and economic incentives in firms

Authors
Journal
Journal of Economic Behavior & Organization
0167-2681
Publisher
Elsevier
Volume
83
Issue
2
Identifiers
DOI: 10.1016/j.jebo.2012.05.005
Keywords
  • Social Norms
  • Crowding Out
  • Contracts
Disciplines
  • Economics

Abstract

Abstract This paper studies the interplay between economic incentives and social norms in firms. We introduce a general framework to model social norms arguing that norms stem from agents’ desire for, or peer pressure towards, social efficiency. In a simple model of team production we examine the interplay of three types of contracts with social norms. We show that one and the same norm can be output-increasing, neutral, or output-decreasing depending on the contract. Multiplicity of equilibria and crowding out effects of steeper incentives can arise.

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