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

Author

Listed:
  • Luigino Bruni

    (LUMSA University)

  • Vittorio Pelligra

    (University of Cagliari)

  • Tommaso Reggiani

    (Masaryk University)

  • Matteo Rizzolli

    (LUMSA University)

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.

Suggested Citation

  • Luigino Bruni & Vittorio Pelligra & Tommaso Reggiani & Matteo Rizzolli, 2019. "The Pied Piper: Prizes, Incentives, and Motivation Crowding-in," MUNI ECON Working Papers 2019-04, Masaryk University, revised Feb 2023.
    • Handle: RePEc:mub:wpaper:2019-04
    DOI: 10.5817/WP_MUNI_ECON_2019-04
    Note: License: CC BY-NC-ND 4.0
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    Keywords

    incentives; prizes; awards; crowding-in; meaning; intrinsic motivation;
    All these keywords.

    JEL classification:

    • B1 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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