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The Pied Piper: Prizes, Incentives, and Motivation Crowding-in

  • Luigino Bruni
  • Vittorio Pelligra
  • Tommaso Reggiani
  • Matteo RizzolliEmail author
Original Paper

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 

Notes

Acknowledgements

We thank the Editor Julie A. Nelson, Jonathan Baron, Avner Ben-Ner, Anja Bodenschatz, Philip Brookins, Robert Dur, Christoph Engel, Marco Fabbri, Miloš Fišar, Bruno Frey, Ruth Grant, Werner Güth, Susanne Neckermann, Rainer Michael Rilke, Lorenzo Sacconi, Robert Sugden, Gari Walkowitz, and two anonymous referees for their useful comments. We thank the participants at the 2016 U.I. Sophia Workshop in Economics and Management; The 2016 Annual Conference of the Italian Society of Law and Economics; The 2017 “Pierluigi Porta” Memorial Workshop; The Behavioral and Experimental Economics Workshop at LUISS University for comments. Financial support from the University of Cologne (DFG Research Unit FOR 1371: Incentives in Firms: Compensation, Ethics, and Behavior), LUMSA University, and the University of Cagliari is gratefully acknowledged.

Disclaimer

The usual disclaimers apply. Experimental data are publicly available at the Open Science Framework (OSF) Repository, Project osf.io/vzky2/.

Compliance with Ethical Standards

Ethical Approval

All procedures performed in studies involving human participants were in accordance with the Ethical standards of the Institutional Research Committee and with the 1964 Helsinki Declaration and its later amendments or comparable ethical standards.

Informed Consent

Informed consent was obtained from all individual participants included in the study.

Supplementary material

10551_2019_4154_MOESM1_ESM.docx (39 kb)
Supplementary material 1 (DOCX 38 kb)

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Copyright information

© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.LUMSA UniversityRomeItaly
  2. 2.University of CagliariCagliariItaly
  3. 3.CRENoSCagliariItaly
  4. 4.Masaryk UniversityBrnoCzech Republic
  5. 5.IZA Institute of Labor EconomicsBonnGermany

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