This lecture, delivered by Jean Tirole at the 2008 afse Congress and based on joint work with Roland Bénabou, revisits the old debate on the effectiveness of incentives, focusing on how the latter impact the perception and meaning of acts. It explains how a principal?s organizational choices...

This paper analyzes how private decisions and public policies are shaped by personal and societal preferences ("values"), material or other explicit incentives ("laws") and social sanctions or rewards ("norms"). It first examines how honor, stigma and social norms arise from individuals'...