Issues in Economic Systems and Institutions: Incentives and Motivation
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Main readings:
- Bengt Holmstrom (1982): “Moral Hazard in Teams.” Bell Journal of Economics, 13(2), 324-40.
- Benjamin Hermalin (1998): “Toward an Economic Theory of Leadership: Leading By Example.” American Economic Review, 88(5), 1188-1206.
- Roland Benabou and Jean Tirole (2003): “Intrinsic and Extrinsic Motivation.” Review of Economic Studies, 70(3), 489-520.
- Roland Benabou and Jean Tirole (2006): “Incentives and Prosocial Behavior.” American Economic Review, 96(5), 1652-78.
Supplementary Readings:
These articles describe lab and field experiments where monetary incentives seemingly produced not the desired effect on behaviour but its opposite.
- Bruno Frey and Felix Oberholzer-Gee: (1997): “The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out.” American Economic Review, 87(4), 746-55.
- Uri Gneezy and Aldo Rustichini (2000): “A Fine is A Price.” Journal of Legal Studies, 29, 1-17.
- Uri Gneezy and Aldo Rustichini (2000): “Pay enough or don’t pay at all.” The Quarterly Journal of Economics, 115(3), 791-810.
To read about the debate on voluntary versus paid blood donations, check out these non-technical essays.
- Richard Titmuss (1971): “The Gift of Blood.” Society, 8(3), 18-26.
- Robert Solow (1971): “Blood and Thunder.” Yale Law Journal, 80(8), 1696-1711.
- Kenneth Arrow (1972): “Gifts and Exchanges.” Philosophy and Public Affairs, 1(4), 343-62.
- Peter Singer (1973): “Altruism and Commerce: A Defense of Titmuss against Arrow.” Philosophy and Public Affairs, 2(3), 312-20.
- Carl Mellstrom and Magnus Johannesson (2008): “Crowding Out in Blood Donation: Was Titmuss Right?” Journal of the European Economic Association, 6(4), 845-63.
In a recent book, philosopher Michael Sandel criticizes economists for putting a price on everything. You can buy it for $16.46 from Amazon, USA. If you want it for free, you have to settle for a shorter version:
Here is a TED talk by Dan Pink, expressing similar sentiments.