NBER WORKING PAPER SERIES
SELF-CONFIDENCE AND SOCIAL INTERACTIONS
Roland Bénabou
Jean Tirole
Working Paper 7585
http://www.nber.org/papers/w7585
NATIONAL BUREAU OF ECONOMIC RESEARCH
1050 Massachusetts Avenue
Cambridge, MA 02138
March 2000
Roland Bénabou and Jean Tirole
NBER Working Paper No. 7585
March 2000
JEL No. A12, C70, D10, D60, J22, J24, J53
ABSTRACT
This paper studies the interactions between an individual’s self–esteem and his social environment –in the workplace, at school, and in personal relationships. Because a person generally has only imperfect knowledge of his own abilities, people who derive benefits from his performance
(parent, spouse, friend, teacher, manager, etc.) have incentives to manipulate his self–confidence.
We first study situations where an informed principal chooses an incentive structure, such as offering payments or rewards, delegating a task, or giving encouragement. We show that extrinsic rewards may have hidden costs –as stressed by psychologists– in that they undermine intrinsic motivation.
As a result, they may be only weak reinforcers in the short run, and become negative reinforcers once withdrawn. Similarly, empowerment is likely to increase motivation, while offers of help may create a dependance. More generally, we identify when the hidden costs of rewards are a myth or a reality.
We next consider situations where people criticize or downplay the performance of their spouse, child, colleague, or subordinate. We formalize ego–bashing as reflecting battles for dominance or authority within the relationship. Finally, we turn to the self–presentation strategies of privately informed agents. We study in particular how depressed individuals may engage in self-deprecation as a way of seeking leniency (a lowering of expectancies) or a “helping hand” on various obligations.
