ABSTRACT
This chapter explores some of the non-monetary motivations, and the models and empirical techniques that behavioural economists use to capture them. In challenging the standard neoclassical approach to incentives, behavioural economists start by exploring the wider range of incentives and motivations that drive people’s choices and decisions – and a prominent theme in the behavioural literature comes in capturing interactions between individual and cooperative goals. Financial incentives may in fact crowd out extrinsic motivations and feelings of collective responsibility unless environmental policy draws on cooperative, non-materialistic aspects of human nature. B. S. Frey argues that monetary incentives can crowd out civic motives but money can also “crowd in” civic motivations when it is used to acknowledge social worth of individual contributions. External rewards offered by a principal affect the intrinsic motivations of an agent so that external incentives are weakly reinforcing in the short-run and negatively reinforcing in the long-run.
