Incentives to Persevere

Abstract

Achieving success often requires persistent effort. We study the effectiveness of two reward mechanisms, all-or-nothing and piece-rate, to incentivize full completion of repeated tasks over time. Our theoretical analysis shows that exogenously imposing the all-or-nothing mechanism can be ineffective due to the potential discouragement effect. In contrast, empowering individuals to choose between the two reward mechanisms can significantly improve the full completion rate. Data from a series of field experiments and follow-up replications provide robust evidence that the all-or-nothing mechanism is effective only when it is presented as an option. Our results highlight the importance of choice in incentivizing persistent effort. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: This work was supported by Monash University [Grant MUM-BTBL-2016-010], Australia-Malaysia 2021–2022 Research Collaboration Development Scheme (Monash Faculty of Business and Economic), and University of Technology Sydney Business School. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4649 .