Abstract There is ample empirical evidence indicating that a substantial fraction of the population exhibits social preferences. Recent work also shows that social preferences influence the effectiveness of incentives in labor relations. Hence, when making contracting decisions, employers should...

We study experimentally voluntary contributions to public goods when none, some, or all previous decisions are observable. When agents observe previous moves, they tend to condition their cooperation on observed cooperation. This leads to two effects of increased transparency: on the one hand,...

People tend, in many ways, to behave like the others they see around them. This note´shows that such reference group behavior tends to reinforce incentives (economic or other) that influence individuals directly only marginally. The workings or such incentives is augmented what might be called...

These notes, published in 1981, introduce the concept of the social multiplier: If the behavior of agents is positively influenced by what members of their reference group do, this enhances the power of economic incentives.