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Continuous Preferences and Discontinuous Choices: How Altruists Respond to Incentives

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  • Seabright Paul B

    (Toulouse School of Economics (IDEI, GREMAQ) and CEPR, seabrigh@cict.fr)

Abstract

This paper models two discontinuities that have been claimed to constitute important exceptions to the standard economic theory of human motivation. The first is a discontinuity in the distribution across population types of the willingness to accept payment in return for certain services such as giving blood, because such services given free are more worthwhile than when performed for payment. The second is that people who give services free may refuse to sell them for some positive price (this is known as crowding out). The paper models both phenomena when individuals act to signal their type in a two-period game with assortative matching. The former is the unique equilibrium of a signaling game in which individuals announce the prices at which they will perform a civic action. The latter may be observed as one of two equilibria of a screening game in which individuals have only a binary participation decision available to signal their type.

Suggested Citation

  • Seabright Paul B, 2009. "Continuous Preferences and Discontinuous Choices: How Altruists Respond to Incentives," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-28, April.
    • Handle: RePEc:bpj:bejtec:v:9:y:2009:i:1:n:14
    DOI: 10.2202/1935-1704.1346
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    References listed on IDEAS

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    2. Goytom Abraha Kahsay & Laura Mørch Andersen & Lars Gårn Hansen, 2014. "Price reactions when consumers are concerned about pro-social reputation," IFRO Working Paper 2014/09, University of Copenhagen, Department of Food and Resource Economics.
    3. Falk, Armin, 2021. "Facing yourself – A note on self-image," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 724-734.
    4. Friedrichsen, Jana & Engelmann, Dirk, 2013. "Who cares for social image? Interactions between intrinsic motivation and social image concerns," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79746, Verein für Socialpolitik / German Economic Association.
    5. Friebel, Guido & Schnedler, Wendelin, 2011. "Team governance: Empowerment or hierarchical control," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 1-13.
    6. Falk, Armin & Zehnder, Christian & Meier, Stephan, 2010. "Did We Overestimate the Role of Social Preferences? The Case of Self-Selected Student Samples," CEPR Discussion Papers 8019, C.E.P.R. Discussion Papers.
    7. Wendelin Schnedler & Radovan Vadovic, 2011. "Legitimacy of Control," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(4), pages 985-1009, December.
    8. Francisco Candel‐Sánchez & Juan Perote‐Peña, 2020. "Optimal Incentives on Multiple Prosocial Activities when Reputation Matters," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(3), pages 1207-1230, July.
    9. Schnedler, Wendelin & Vanberg, Christoph, 2014. "Playing ‘hard to get’: An economic rationale for crowding out of intrinsically motivated behavior," European Economic Review, Elsevier, vol. 68(C), pages 106-115.
    10. Dayé, Modeste, 2014. "Volunteering at the extensive margins in Developing Countries: Extrinsic or Intrinsic Motives?," MPRA Paper 59202, University Library of Munich, Germany, revised 10 Oct 2014.
    11. Brock, J Michelle, 2017. "Self-worth versus net worth: Image motivation and the quantity-quality trade-off," CEPR Discussion Papers 12208, C.E.P.R. Discussion Papers.
    12. Brandon C. Koford & Glenn C. Blomquist & David M. Hardesty & Kenneth R. Troske & Margaret Hughes & Fred Morgan, 2012. "Estimating Consumer Willingness to Supply and Willingness to Pay for Curbside Recycling," Land Economics, University of Wisconsin Press, vol. 88(4), pages 745-763.
    13. Goytom Abraha Kahsay & Workineh Asmare Kassie & Abebe Damte Beyene & Lars Gårn Hansen, 2017. "Do public works programs crowd-out pro-environmental behavior? Empirical evidence from food-for-work programs in Ethiopia," IFRO Working Paper 2017/13, University of Copenhagen, Department of Food and Resource Economics.
    14. Francisco Candel-Sánchez & Juan Perote-Peña, 2023. "Incentives for prosocial behavior under reputation persistence and policy lags," Journal of Economics, Springer, vol. 139(3), pages 209-233, August.
    15. te Velde, Vera L. & Louis, Winnifred, 2022. "Conformity to descriptive norms," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 204-222.
    16. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A preference-Based Lucas Critique of Public Policy," UMASS Amherst Economics Working Papers 2009-11, University of Massachusetts Amherst, Department of Economics.
    17. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A Preference-based Lucas Critique of Public Policy," CESifo Working Paper Series 2734, CESifo.
    18. te Velde, Vera L., 2022. "Heterogeneous norms: Social image and social pressure when people disagree," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 319-340.
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    20. Samuel Bowles & Sandra Polania-Reyes, 2012. "Economic Incentives and Social Preferences: Substitutes or Complements?," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 368-425, June.

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