Abstract

This paper provides a selective overview highlighting some major themes of the recent lit-erature on the role of pro-social motivation in the provision of social services. We focus on the insights obtained from two alternative ways of modelling pro-social motivation; action-oriented and output-oriented altruism. This literature has implications regarding the design of optimal incentives, the selection of motivated agents and its interaction with monetary rewards, and the optimal organizational form required to exploit such motivations. We also discuss the implica-tions for government provision of social services from the perspective of a parallel literature that emphasizes the noncontractible nature of output, and contrast it with the implications derived from work emphasizing the role of pro-social motivation.