Working Paper

Accounting for Context: Separating Monetary and Social Incentives


  • Bergh
  • A.
  • Wichardt
  • P.
Publication Date

This paper proposes a simple framework to model social preferences in a game theoretic framework which explicitly separates economic incentives from social (context) effects. It is argued that such a perspective makes it easier to analyse contextual effects. Moreover, the framework is used to exemplify both theoretically and empirically how contextual variables such as social norms can worsen a social dilemma or possibly make it disappear. The empirical results of a randomised controlled classroom experiment show that women are more responsive to such contextual effects and that social agreements can also worsen economic inefficiencies.

Kiel Institute Expert


JEL Classification
D3, D63, Z10

Key Words

  • Context Effects
  • Efficiency
  • norms
  • preferences
  • utility