When incentives don't work - "motivation crowding out"

This article explores the phenomenon of "motivation crowding out": higher incentives leading to lower offers, contrary to standard microeconomic theory. Two economic explanations for this phenomenon are presented. The model by B`enabou and Tirole explains it by appeal to information asymmetries between principal and agent; incentives are read as cues about what the principal thinks about the situation. The model by Sliwka refers to conformist behavior: the agents take incentives to be informative about social norms. The topic of motivation crowding out illustrates the challenge posed to microeconomics by behavioral economic research and the attempts to accommodate such findings within the framework of traditional microeconomics.