Kübler, Dorothea, Weibull, Jörgen W. and Huck, Steffen (2012) Social norms and economic incentives in firms. Journal of Economic Behavior and Organization, vol. 83 (N° 2). pp. 173-185.

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.