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Presented By: Social, Behavioral, and Experimental Economics (SBEE)

Social, Behavioral & Experimental Economics (SBEE): Intentions for Doing Good Matter for Doing Well: The (Negative) Signaling Value of Prosocial Incentives

Stephan Meier, Columbia Business School

Economics Economics
Economics
Abstract:

Many firms consider prosocial initiatives to be an effective tool to motivate workers. However, despite some initial supportive evidence, little is known about when and how prosocial incentives work. Our field experiment shows that the instrumental use of prosocial incentives to increase effort can backfire. The negative effect is particularly strong for performance-based prosocial incentives, which are, by construction, more instrumental than unconditional incentives, and for non-prosocial workers, who do not care to support the cause. These findings highlight some serious limitations of prosocial incentives: firms' perceived intentions and pool of employees will be crucial for their effectiveness.

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