The Effectiveness of Incentive Schemes in the Presence of Implicit Effort Costs

Goerg, Sebastian J.; Kube, Sebastian; Radbruch, Jonas

doi:10.1287/mnsc.2018.3160

Cited by 37 publications

(20 citation statements)

References 66 publications

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“…The results in the present individual-effort experiment are therefore consistent with the results in contests. The present results are also consistent with a recent realeffort study by Goerg et al (2019) that employs an individual-choice setting.…”

Section: Results 3 Subjects' Average Effort Weakly Increases With the supporting

confidence: 92%

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Alekseev

2021

Exp Econ

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I study the effect of task difficulty on workers’ effort. I find that task difficulty has an inverse-U effect on effort and that this effect is quantitatively large, especially when compared to the effect of conditional monetary rewards. Difficulty acts as a mediator of monetary rewards: conditional rewards are most effective at the intermediate or high levels of difficulty. The inverse-U pattern of effort response to difficulty is inconsistent with many popular models in the literature, including the Expected Utility models with the additively separable cost of effort. I propose an alternative mechanism for the observed behavior based on non-linear probability weighting. I structurally estimate the proposed model and find that it successfully captures the behavioral patterns observed in the data. I discuss the implications of my findings for the design of optimal incentive schemes for workers and for the models of effort provision.

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Section: Results 3 Subjects' Average Effort Weakly Increases With the supporting

confidence: 92%

“…Making the cost of effort steeper leads to a sharp decrease in effort, as predicted. This result is consistent with the findings in the contest literature (Dechenaux et al 2015), as well as in the studies employing real-effort tasks (Goerg et al 2019).…”

Section: Introductionsupporting

confidence: 92%

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Alekseev

2021

Exp Econ

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“…Making the cost of effort steeper leads to a sharp decrease in effort, as predicted. This result is consistent with the results reported in the contest literature (Dechenaux et al, 2015), as well as the studies employing real-effort tasks (Goerg et al, 2019). I find that the effect of difficulty on effort is inverse-U-shaped.…”

Section: Introductionsupporting

confidence: 92%

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Alekseev

2019

SSRN Journal

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I study the effect of task difficulty on workers' effort and compare it to the effect of monetary rewards in an incentivized lab experiment. I find that task difficulty has an inverse-U effect on effort, and that this effect is quantitatively large when compared to the effect of conditional monetary rewards. Difficulty acts as a mediator of monetary rewards: conditional rewards are most effective at the intermediate or high levels of difficulty. I show that the inverse-U pattern of effort response to difficulty is not consistent with the Expected Utility model but is consistent with the Rank-Dependent Utility model that allows for non-linear probability weighting. I structurally estimate the model and find that it successfully captures the treatment effects observed in the data. I discuss the implications of my findings for the design of optimal incentive schemes for workers and modeling effort.

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“…The slider task is now well established as a tool for experimental economists. Since its inception, the slider task has been used to study contract law (Depoorter and Tontrup, 2012), tax compliance (Fonseca and Myles, 2012;Doerrenberg et al, 2015), cheating in the workplace (Gill et al, 2013), gender differences in competition (Gill and Prowse, 2014), tax complexity (Abeler and Jäger, 2015), outside options (Goerg et al, 2017), downsizing (Drzensky and Heinz, 2016), social enterprises (Besley and Ghatak, 2017), volunteering (Brown et al, 2013), peer pressure (Georganas et al, 2015), social insurance (Ahlquist et al, 2014), delegation (Feess et al, 2014) and creativity (Bradler et al, 2015), among others. 2 This paper describes the properties and advantages of the slider task.…”

Section: Introductionmentioning

confidence: 99%

Measuring costly effort using the slider task

Gill¹,

Prowse²

2019

Journal of Behavioral and Experimental Finance

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Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

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The Effectiveness of Incentive Schemes in the Presence of Implicit Effort Costs

Cited by 37 publications

References 66 publications

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Measuring costly effort using the slider task

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