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Journal of Economic Surveys

INCENTIVES AND SOCIAL NORMS: A MOTIVATION-BASED ECONOMIC ANALYSIS OF SOCIAL NORMS

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Abstract

Abstract It is now commonplace to regard social norms as a subject of growing interest in the economic literature (e.g. game theoretical approaches based on ‘other-regarding’ individual preferences, the analysis of the impact of rewards or punishment on individuals’ behaviour through experimental economics as well as field experiments, the revival of the institutionalist tradition spurred on by the influential work of Douglas North and followed by many others and the growing influence of neuroeconomics). In this paper, we focus on the relationship between incentives and social norms and survey the literature that could constitute the foundations of a motivation-based economic analysis of social norms. Our main findings are that (1) the interaction between incentives and social norms is far from obvious since taking social norms into account involves the introduction of supplementary motives, in addition to self-interest, into the economic analytical framework; (2) the analysis of the interaction between incentives and social norms resists an approach exclusively in terms of crowding-in and -out effects because it is sensitive to whether it concerns behaviours driven by honour or by social stigma; (3) as a result, it is difficult to precisely evaluate the policy implication of the interactions between incentives and social norms.

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