Working Paper: CEPR ID: DP5768
Authors: Tore Ellingsen; Magnus Johannesson
Abstract: Many people are sensitive to social esteem, and their pride is a source of pro--social behavior. We present a game-theoretic model in which sensitivity to esteem varies across players and may depend on context as well players' beliefs about their opponents. For example, the pride associated with a generous image is greater when the player holding the image is in fact generous and believes the observers to be generous as well. The model can account both for the fact that players' behaviour sometimes depends on the opponents' unchosen options and for the prevalence of small symbolic gifts. Perhaps most importantly, the model offers an explanation for motivational crowding out: Control systems and pecuniary incentives may erode morale by signalling to the agent that the principal is not worth impressing.
Keywords: esteem; framing; incentives; motivational crowding out; social preferences
JEL Codes: D1; D23; D82; Z13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| players' sensitivity to social esteem (C92) | pro-social behavior (D64) |
| players' beliefs about their opponents (C72) | pro-social behavior (D64) |
| principal's distrust (Y40) | agent's effort (L85) |
| principal's choice set (D71) | agent's performance (L85) |