Do Performance-Contingent Incentives Help or Hinder Divergent Thinking?

Abstract

Although divergent thinking generates multiple unconventional approaches to a problem or challenge, claims from prior experimental studies that incentives hinder divergent thinking often involve problems that have only one solution. In our first experiment, we replicate the negative effect of performance-based incentives in such settings, finding that participants solve fewer insight problems under performance-based pay than under fixed pay. But in a second experiment in which we modify these same problems to allow more than one unconventional solution, participants with performance-based pay identify significantly more divergent solutions than do their fixed-pay counterparts. We also find evidence that incentives stimulate increased divergent thinking in a third experiment in which participants design rather than solve insight problems. Overall, our findings suggest that the negative effect of performance-contingent incentives in some settings is more a reflection of the overly restrictive nature of these settings than the failure of incentives to stimulate divergent thinking.