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Social norms and economic incentives in firms

Huck, S.; Kubler, D.; Weibull, J.; (2003) Social norms and economic incentives in firms. (ELSE Working Papers 62). ESRC Centre for Economic Learning and Social Evolution: London, UK. Green open access

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This paper studies the interplay between economic incentives and social norms in firms. We introduce a general framework to model social norms arguing that norms stem from agents’ desire for, or peer pressure towards, social efficiency. In a simple model of team production we examine the interplay of three different types of contracts with social norms. We show that one and the same norm can be output-increasing, neutral, or output-decreasing depending on the incentive scheme. We also show how social norms can induce multiplicity of equilibria and crowding out.

Type: Working / discussion paper
Title: Social norms and economic incentives in firms
Open access status: An open access version is available from UCL Discovery
Publisher version: http://else.econ.ucl.ac.uk/newweb/papers.php#2003
Language: English
Keywords: JEL classification: D23. Social norms, incentives, contracts
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/14635
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