An Experimental Investigation of Motivation Crowding Theory

A large amount of research has debated the effects of extrinsic incentives on altruistic motivation. This paper contributes to this discussion by examining motivation crowding theory through a unique experimental design. The methodology allows the author to measure the magnitude of the crowding out effect with a level of precision that has not been achieved in the past. The paper focuses on the impacts of financial incentives on altruistic behavior in the form of a donation to the Red Cross. The results reveal that crowding out does occur and that the magnitude of the effect is equal to $1.75. This effect is further analyzed in relation to several sub-groups within the sample.