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Pro-social Motivations, Externalities and Incentives

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  • Raphael Soubeyran

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro - Montpellier SupAgro - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

Abstract

This paper analyzes how pro-social motivations shape the relationship between incentives and inequality. I consider a principal who offers individual rewards to a group of agents to induce them to exert effort and to coordinate at least-cost. The agents value the payoffs of the other agents, and they are averse to inequality. My analysis highlights that pro-social motivations have an a priori ambiguous effect on inequality in the reward distribution. Despite this initial ambiguity, I show that the rewards are more unequal and lower when the agents have pro-social preferences. The model delivers empirical implications for intervention programs supporting the adoption of new health or agricultural technologies.

Suggested Citation

  • Raphael Soubeyran, 2021. "Pro-social Motivations, Externalities and Incentives," CEE-M Working Papers hal-03212888, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    • Handle: RePEc:hal:wpceem:hal-03212888
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-03212888v2
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    References listed on IDEAS

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    Keywords

    incentives; externality; principal; agents; coordination; pro-social preferences;
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