LAUSR

Even though the interaction of intrinsic motivation and concerns for social approval has important implications both for crowding out of intrinsic motivation through incentives and for producer choices, little is known about this interaction empirically. We present a laboratory experiment that provides evidence of a relevant interaction effect in the context of ethical consumption. We elicit a proxy for Fairtrade preferences before the experiment in which we elicit willingness to pay for conventional and Fairtrade chocolate. Treatments vary whether this can be signaled to other participants. Our results document that subjects state a higher Fairtrade premium when signaling is possible and that the effect of social approval seeking is heterogenous. Only participants who are not intrinsically motivated to buy Fairtrade seem to be concerned with their social image and react to the treatment.