Journal article
How social preferences provide effort incentives in situations of financial support
PloS one, Vol.16(1), pp.e0244972-e0244972
2021
DOI: 10.1371/journal.pone.0244972
PMCID: PMC7842880
PMID: 33507931
Abstract
When people anticipate financial support, they may reduce preventive effort. We conjecture that the source of financial support can mitigate this moral hazard effect due to social preferences. We compare effort choices when another individual voluntarily provides financial support against effort choices under purely monetary incentives. When financial support is provided voluntarily by another individual, we expect recipients to exert more effort to avoid bad outcomes (level effect) and to reduce effort provision to a lesser degree as financial support becomes more generous (sensitivity effect). We conducted an incentivized laboratory experiment and find some evidence for the level effect and strong evidence for the sensitivity effect. This leads to significant gains in material efficiency with expected wealth being 5.5% higher and 37.3% less volatile.
Details
- Title: Subtitle
- How social preferences provide effort incentives in situations of financial support
- Creators
- Christian Knoller - Ludwig-Maximilians-Universität MünchenStefan Neuß - Ludwig-Maximilians-Universität MünchenRichard Peter - University of Iowa
- Resource Type
- Journal article
- Publication Details
- PloS one, Vol.16(1), pp.e0244972-e0244972
- DOI
- 10.1371/journal.pone.0244972
- PMID
- 33507931
- PMCID
- PMC7842880
- NLM abbreviation
- PLoS One
- ISSN
- 1932-6203
- eISSN
- 1932-6203
- Grant note
- name: Deutscher Verein für Versicherungswissenschaft (DVfVW) e.V.
- Language
- English
- Date published
- 2021
- Academic Unit
- Finance
- Record Identifier
- 9984230422302771
Metrics
8 Record Views