Motivational crowding effects of monetary and nonmonetary incentives: Evidence from a common pool resources experiment in China

Abstract

This study examines the motivational crowding effects of a traditional monetary incentive – fines – and a relatively new nonmonetary incentive – a public revelation mechanism – on the conservation of common pool resources. Previous literature largely examines the crowding effects of instruments that include both moral suasion and monetary incentives. This paper examines the crowding effects of these incentives beyond moral suasion. We achieve these purposes by implementing a lab experiment in China. We find that, contrary to much of the previous literature, monetary incentives in the form of high penalties crowd in intrinsic motivation. This effect is primarily observed in individuals with the lowest initial extraction levels. Finally, we find that the public revelation mechanism crowds out intrinsic motivation; this crowd-out effect falls primarily on a specific sub-population, conditional cooperators. The debriefings suggest one possible reason for the crowd-out effects: While the public revelation mechanism pressures subjects to not over-harvest, it also reveals others’ extractions, which happens to be higher than expected. This crowds out the conservation effort of conditional cooperators. This informational function of the public revelation mechanism is generally overlooked in previous literature.