Working Paper No. 565

Social Norms and Optimal Incentives in Firms

Published: October 8, 2001Pages: 12Keywords: Social Norms, Incentives, ContractsJEL-codes: D23

Social Norms and Optimal Incentives in Firms Steffen Huck, Dorothea Kübler and Jörgen Weibull


This paper deals with the interplay between economic incentives and social norms in firms. We outline a simple model of team production and provide preliminary results on linear incentive schemes in the presence of a social norm that may cause multiple equilibria. The effect of the social norm on the optimal bonus rate is discussed, as well as the effectiveness of temporary changes in the bonus rate as a means to move a firm from a bad to a good equilibrium.

Elgar Companion to

Social Capital and Health

Martin Ljunge okt 2018.jpg

Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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