The Pied Piper: Prizes, Incentives, and Motivation Crowding-in

In mainstream business and economics,prizessuch as the Presidential Medal of Freedom are understood as special types ofincentives, with the peculiar features of being awarded in public, and of having largely symbolic value. Informed by both historical considerations and philosophical instances, our study defines fundamental theoretical differences betweenincentivesandprizes. The conceptual factors highlighted by our analytical framework are then tested through a laboratory experiment. The experimental exercise aims to analyze how prizes and incentives impact actual individuals' behavior differently. Our results show that bothincentives(monetary and contingent) andprizes(non-monetary and discretional rewards) boost motivation to perform if awarded publicly, but onlyprizescrowd in motivation promoting virtuous attitude.