Differential Performance in High vs. Low Stakes Tests: Evidence from the GRE Test

Abstract

We study how different demographic groups respond to incentives by comparing their performance in and stakes situations. The high stakes situation is the GRE examination and the low stakes situation is a voluntary experimental section of the GRE. We find that Males exhibit a larger drop in performance between the high and low stakes examinations than females, and Whites exhibit a larger drop in performance compared to minorities. Differences between high and low stakes tests are partly explained by the fact that males and whites exert lower effort in low stakes tests compared to females and minorities.