Abstract
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 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 contract. Multiplicity of equilibria and crowding out effects of steeper incentives can arise.
JEL codes
- D23: Organizational Behavior • Transaction Costs • Property Rights
See also
Published in
Journal of Economic Behavior and Organization, vol. 83, 2012, pp. 173–185