A gift with thoughtfulness: A field experiment on work incentives

Abstract

We conduct two field experiments to investigate whether and how different forms of monetary gifts influence workers' performance in the workplace. Temporary research assistants are surprised with a monetary gift after completing a pre-announced task and decide whether to work on an additional one. We find in both experiments that the impact of gift type on workers' productivity is contingent on the gift amount. Specifically, for the larger but not the smaller gift amount, a more thoughtful presentation of the gift cash enclosed in a red envelope outperforms plain cash by increasing workers' overall productivity, willingness to participate, and work quality. More importantly, these effects prevail under an unappealing pay scheme in the task, as workers are more likely to perceive the thoughtful gift as the employer's appreciation, which counteracts the negative income effect stemmed from reference dependence.