AbstractAwards are non‐material, extrinsic compensation taking the form of orders, medals, decorations and prizes. They have been widely used in monarchies and republics, private organizations, not‐for‐profit and profit‐oriented firms. Nevertheless, they have so far not received much attention. This paper develops empirically testable hypotheses, analysing the determinants of the supply of awards. The hypotheses refer to the possibility of using awards, the effectiveness of awards, and the capacity to maintain the scarcity value of awards. As the number of awards bestowed cannot (at least so far) be measured adequately, empirical evidence is adduced by way of illustrative examples.