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Incentives for Prosocial Behavior: The Role of Reputations

Jan 2013
Working Paper
12-022
By  Christine Exley
In public settings, the impact of monetary incentives on prosocial behavior is empirically mixed. Existing theory explains these finding by noting that incentives can introduce public signals that may or may not crowd out motivation to volunteer. The strength of these public signals are normally unobserved by the researcher, so it remains unclear as to when significant crowding out is likely to occur and render incentives ineffective. I overcome this ambiguity by examining individuals for whom the signal strength is likely zero - those with strong public reputations. In a laboratory experiment, I show that the crowd out in response to public incentives is much less likely among those with public reputations as opposed to private reputations, particularly for women.