Behavioral Economics Exploration Into Doing Good

Here’s some interesting weekend reading for you–

The WSJ Blog points to research by Dan Ariely of MIT, Anat Bracha of Tel Aviv U, and Stephan Meier of the Fed on “how extrinsic incentives (such as cash or gifts) influence the effects of “image motivation” (looking good in public).”

In one experiment they called “Click for Charity,” what they found was interesting.

Without any monetary incentive, the subjects (Princeton University undergrads) put forth more effort in public than in private. Add in money, and their effort increases in private while not changing much in public.

The authors find that the signal from a prosocial act — doing good — gets diluted when a financial benefit — doing well — is included. People want to be seen in public doing good acts, the authors write. On the other hand, “if no one is watching (i.e. the prosocial decision is private) the incentive to be doing well cannot dilute any signal to others, and consequently extrinsic incentives are very likely to increase prosocial behavior.”

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