Seminar in Microeconomics - Michael Kosfeld (Goethe University Frankfurt)
Incentives, Self-Selection, and Coordination of Motivated Agents
Tuesday 10 March 2020 (12h15 - 13h30) - Extranef - 109
We study the role of incentives for the self-selection and coordination of motivated agents in a lab experiment. Participants can self-select into different teams in which they can earn money but also exert “social effort” to produce charitable donations. The production of donations is characterized by complementarities: a participant’s return of social effort increases in the social effort of others in the same team, generating scope for both sorting and coordination. Our theoretical and empirical results show that differences in incentives across teams facilitate the sorting of motivated agents and thereby increase donations. Participants exert more social effort if they are in the low-incentive team, but only if self-selection is possible.