The Pied Piper: Prizes, Incentives, and Motivation Crowding-in
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ORIGINAL PAPER
The Pied Piper: Prizes, Incentives, and Motivation Crowding‑in Luigino Bruni1 · Vittorio Pelligra2,3 · Tommaso Reggiani4,5 · Matteo Rizzolli1 Received: 13 July 2018 / Accepted: 22 March 2019 © Springer Nature B.V. 2019
Abstract In mainstream business and economics, prizes such as the Presidential Medal of Freedom are understood as special types of incentives, with the peculiar features of being awarded in public, and of having largely symbolic value. Informed by both historical considerations and philosophical instances, our study defines fundamental theoretical differences between incentives and prizes. The conceptual factors highlighted by our analytical framework are then tested through a laboratory experiment. The experimental exercise aims to analyze how prizes and incentives impact actual individuals’ behavior differently. Our results show that both incentives (monetary and contingent) and prizes (non-monetary and discretional rewards) boost motivation to perform if awarded publicly, but only prizes crowd in motivation promoting virtuous attitude. Keywords Incentives · Prizes · Awards · Crowding-in · Meaning · Intrinsic motivation JEL Classification B1 · D03 · J33 He advanced to the council-table: And, “Please your honors,” said he, “I’m able, By means of a secret charm, to draw All creatures living beneath the sun, That creep or swim or fly or run, After me so as you never saw!” (Robert Browning, The Pied Piper of Hamelin 1842).
“It is clear that the reward lies in the action itself, and that the power of the honorable to attract the minds of men is immense: Its beauty floods our minds and sweeps us along, enchanted with wonder at its brilliance and splendor.” (Seneca, De Beneficiis 22.2).
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10551-019-04154-3) contains supplementary material, which is available to authorized users.
Introduction and Aim
LUMSA University, Rome, Italy
Human motivation is complex, and the history of cultures shows that people act based on much more than material rewards. Honor, esteem, recognition, shame, and glory have all been (and still are) important drivers of numerous human actions. However, the mainstream economic approach to the study of behavior in markets and organizations has, from the outset, focused on a narrow set of rewards for actions that made social interactions simpler, more predictable, and controllable. In its parlance, all the motivations that drive human action are almost invariably referred to as “incentives.”1
2
University of Cagliari, Cagliari, Italy
1
3
CRENoS, Cagliari, Italy
4
Masaryk University, Brno, Czech Republic
5
IZA Institute of Labor Economics, Bonn, Germany
* Matteo Rizzolli [email protected] Luigino Bruni [email protected] Vittorio Pelligra [email protected] Tommaso Reggiani [email protected] 1
The “ideology of incentives” (Bruni 2015) goes well beyond the boundaries of economic relations. Grant (2011), who conducted the most systematic
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