Real-effort Experiment Research Articles

Incentivizing interdependent tasks: Evidence from a real-effort experiment

Workers are often required to jointly work on interdependent tasks that are cognitively complex. Yet, relatively little empirical evidence exists on how to effectively incentivize the workforce in such settings. Using a novel real-effort experiment, we assess the effects of team-based incentives (TBI) and individual-based incentives (IBI) on productivity. We provide evidence that TBI yield higher productivity than IBI, both when holding the incentives for the worker constant, and when holding the marginal cost of output for the firm constant. Various measures point towards workers engaging in lower quality work under IBI. We also provide new evidence that performance does not necessarily increase with the size of the monetary rewards. Overall, these results underscore the benefits of incentivizing the workforce in teams in settings in which workers’ payoff are interdependent and tasks are complex.

Work motivation and teams

This paper presents a novel technique to measure motivation for working on a task using deviations from the money-maximising benchmark in a real-effort experiment. Although we find that average output increases in response to team incentives and observation, we also find that workers with high intrinsic motivation do not respond to team incentives. The reason is that highly motivated workers already work hard, and team incentives are not strong enough to overcome the high cost of additional effort.

Payment Systems, Insurance, and Agency Problems in Healthcare: A Medically Framed Real-Effort Experiment

Payment Systems, Insurance, and Agency Problems in Healthcare: A Medically Framed Real-Effort Experiment

The Effects of Relative Performance Information and Transparency on Knowledge Sharing and Productive Effort

Using a real-effort experiment, we investigate individuals’ simultaneous decisions regarding how much effort to exert and how to allocate this effort when working on a productive task (productive effort) and sharing knowledge (knowledge-sharing effort). Specifically, we examine the effects of relative performance information (RPI) and the transparency of individual knowledge-sharing decisions (transparency). We find that RPI increases productive effort but reduces knowledge-sharing effort over time. In contrast, transparency does not influence productive effort but increases knowledge-sharing effort. Furthermore, the results indicate that transparency can counteract the adverse effect of RPI on knowledge-sharing effort over time without impeding productive effort. We link our results to the psychological concepts of social comparison, impression management, and reciprocity. Implications for research and practice are discussed.

Failures in Forecasting: An Experiment on Interpersonal Projection Bias

Using a real-effort experiment, we show that people project their current tastes onto others when forecasting others’ behavior, even when their tastes are exogenously manipulated and transparently different. In the first part of our experiment, “workers” stated their willingness to continue working on a tedious task. We varied how many initial tasks workers completed before eliciting their willingness to work (WTW); some were relatively fresh when stating their WTW, whereas others were relatively tired. Later, a separate group of “predictors”—who also worked on the task—guessed the WTW of workers in each state. We find: (i) tired workers were less willing to work than fresh workers; (ii) predictors (in aggregate) accurately guessed the WTW of workers when they were in the same state as the workers about whom they were predicting; but (iii) when fresh predictors were guessing about tired workers, they substantially overestimated their WTW; and (iv) when tired predictors were guessing about fresh workers, they underestimated their WTW. Using an additional treatment, we find that workers also mispredicted their own future WTW, and we compare the magnitudes of intrapersonal and interpersonal projection bias. This paper was accepted by Axel Ockenfels, behavioral economics and decision analysis. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.00655 .

Moral Hazard Incentives under Formal Insurance and Informal Insurance: Evidence from a Framed Field Experiment

Abstract This paper explores moral hazard incentives associated with formal and informal insurance. We develop a theoretical model of risky effort that incorporates formal insurance and informal risk sharing, and test model predictions through a real-effort experiment with smallholder farmers in rural Uganda. Consistent with the theory, we find evidence of moral hazard under informal insurance. We, however, do not find evidence of moral hazard under formal insurance in our experiment. Experiencing a bad outcome, however, makes the risk in production more salient to farmers, and they increase their insurance coverage. These results suggest there may be some space for expanding indemnity-based insurance to smallholder farmers through awareness programmes.

Can prosocial incentives and self-chosen goals improve performance? An online real-effort experiment

Abstract We study incentive schemes that combine self-chosen goals with prosocial rewards. We design a real-effort task experiment with MTurk workers. Upon achieving self-chosen goals, rewards are paid to the worker in the monetary treatments or to charities in the prosocial treatments. To explore the mechanisms whereby rewards can improve performance with prosocial incentives, we develop a theoretical model with goal dependence and earning reference points. Our results show that when rewards are paid to charities, performance improvements happen through workers setting higher goals. This effect is stronger for those whose interests are matched with the charity’s mission. Our findings have important implications for incentivizing workers in the gig economy.

Assessing the impact of human–robot collaborative order picking systems on warehouse workers

Robotisation is increasing in warehouse operations, but human employment continues to be relevant. Traditionally manual activities, such as order picking, are being re-designed into collaborative human–robot tasks. This trend exemplifies the transition towards a human-centric Industry 5.0, focusing on synergy instead of seeking human replacement. However, human workers are increasingly hard to recruit and retain. We contribute to the underrepresented literature on human factors within the domain of operations and production management research and investigate the deployment of robotic technologies alongside human workers in a sustainable way. With a unique real-effort experiment, we investigate how the manipulation of picker’s experienced levels of autonomy affects their job satisfaction and core self-evaluations, two key behavioural outcomes that determine employee turnover intentions. We establish that the introduction of human–robot collaboration positively affects job satisfaction for the contrasting collaboration dynamics of (i) gaining control (the human leading the robot) and (ii) ceding control (the human following the robot). This positive effect is larger when the human is following the robot. We additionally find that following the robot positively affects pickers’ self-esteem and that self-efficacy related to human–robot interaction benefits from the introduction of collaborative robotics, regardless of the setup dynamics.

Free Riding, Democracy and Sacrifice in the Workplace: Evidence from a Real Effort Experiment

Free Riding, Democracy and Sacrifice in the Workplace: Evidence from a Real Effort Experiment

Can Prosocial Incentives and Self-chosen Goals Improve Performance? An Online Real Effort Experiment

Can Prosocial Incentives and Self-chosen Goals Improve Performance? An Online Real Effort Experiment

Social undermining as a dark side of symbolic awards: Evidence from a regression discontinuity design

In this paper, we study the effects of non-monetary symbolic awards on winners, losers, and their peers. Using a regression discontinuity design, we examine post-award performance differences between those who barely won a symbolic performance award and those who came just short of winning the award in a large insurance company (Study 1). Our findings show that awarded workers performed worse than their non-awarded counterparts, and worse performance was more severe in more competitive teams. Building on these findings, we explore potential mechanisms using an incentivized real-effort experiment (Study 2). The experiment reveals that award winners’ worse post-award performance relative to unawarded workers was driven by social undermining in the form of deliberate sabotage by coworkers, rather than award winners’ own behavioral changes due to negative motivational effects.

Competing now and then: The effects of delay on competitiveness across gender

Using an online real-effort experiment, we investigate whether and how delaying competition affects the individuals’ willingness to compete. Unlike our prior, we find that men and women are equally likely to compete in our baseline no-delay condition, with a task considered to be gender-neutral. We discuss how the gender gap in entry rates does not appear to be omnipresent, but instead depends on circumstances and beliefs. Men are significantly more likely than women to provisionally sign up for a delayed tournament when a future opportunity to study for the task is available; however, this difference in rates is evanescent, disappearing when the actual choice is made later. Women who have access to studying see an increase in performance, while men do not. Delaying competition by itself does not generate a gender gap in competitiveness. We explore a variety of potential reasons for why knowing one has access to studying produces the gender gap in tournament entry. We rule out differences in risk aversion, confidence, and task stereotypes. Control treatments where the delay itself is a choice rule out the possibility that the forced nature of delay may be at the root of the overly competitive initial decisions by the men. We conjecture that these patterns may arise due to men being more confident than women and making choices based on an overly ambitious view about future selves’ ability to study.

A reassessment of the potential for loss-framed incentive contracts to increase productivity: a meta-analysis and a real-effort experiment

Substantial productivity increases have been reported when incentives are framed as losses rather than gains. Loss-framed contracts have also been reported to be preferred by workers. The results from our meta-analysis and real-effort experiment challenge these claims. The meta-analysis’ summary effect size of loss framing is a 0.16 SD increase in productivity. Whereas the summary effect size in laboratory experiments is a 0.33 SD, the summary effect size from field experiments is 0.02 SD. We detect evidence of publication biases among laboratory experiments. In a new laboratory experiment that addresses prior design weaknesses, we estimate an effect size of 0.12 SD. This result, in combination with the meta-analysis, suggests that the difference between the effect size estimates in laboratory and field experiments does not stem from the limited external validity of laboratory experiments, but may instead stem from a mix of underpowered laboratory designs and publication biases. Moreover, in our experiment, most workers preferred the gain-framed contract and the increase in average productivity is only detectable in the subgroup of workers (~ 20%) who preferred the loss-framed contracts. Based on the results from our experiment and meta-analysis, we believe that behavioral scientists should better assess preferences for loss-framed contracts and the magnitude of their effects on productivity before advocating for greater use of such contracts among private and public sector actors.

Labor Supply Reaction to Wage Cuts and Tax Increases: A Real-Effort Experiment

We investigate the labor supply reaction to wage cuts and tax increases using a real-effort experiment. First, subjects perform a task and receive a reward with taxes deducted. Second, the wage cut treatment reduces the wage rate and the tax increase treatment increases the tax; wage and tax remain unchanged for the control group. The real wage is equal for both treatments, and both treatments had significantly smaller increases in effort levels than the control group. The effort level change did not differ between the treatments. Therefore, the net wage illusion and tax aversion identified in previous studies are absent.

Work Motivation and Teams

We provide a new measure of work motivation and show that motivation shapes the effects of team incentives and observation by peers on performance. In particular, we measure motivation to work hard as the deviation from the money-maximizing benchmark in a real-effort experiment. While we find that average output increases in response to team incentives and observation, we find that highly motivated workers do not respond. The reason is that highly motivated workers already work hard and increasing effort even further is very costly to them.

Worker Autonomy and Performance: Evidence from a Real-Effort Experiment

Worker Autonomy and Performance: Evidence from a Real-Effort Experiment

Redistribution and Production with a Subsistence Income Constraint: A Real-effort Experiment

Redistribution and Production with a Subsistence Income Constraint: A Real-effort Experiment

Mitigating Gig and Remote Worker Misconduct: Evidence from a Real Effort Experiment

Employee misconduct is costly to organizations and has the potential to be even more common in gig and remote work contexts, in which workers are physically distant from their employers. There is, thus, a need for scholars to better understand what employers can do to mitigate misconduct in these nontraditional work environments, particularly as the prevalence of such work environments is increasing. We combine an agency perspective with a behavioral relationship-based perspective to consider two avenues through which gig employers can potentially mitigate misconduct: (1) through the communication of organizational values and (2) through the credible threat of monitoring. We implement a real effort experiment in a gig work context that enables us to cleanly observe misconduct. Consistent with our theory, we present causal evidence that communication of organizational values, both externally facing in the form of social/environmental responsibility and internally facing in the form of an employee ethics code, decreases misconduct. This effect, however, is largely negated when workers are informed that they are being monitored. We provide suggestive evidence that this crowding out is due to a decrease in perceived trust that results from the threat of monitoring. Our results have important theoretical implications for research on employee misconduct and shed light on the trade-offs associated with various potential policy solutions.

Forced distribution rating systems and team collaboration

This study provides three real-effort experiments on how a forced distribution rating system (FDRS) influences team collaboration. In the first and the second experiment, we examine the performance implications of an FDRS in a card sequencing task (1) when working alone and (2) when working in a team. In the third experiment, we test how an FDRS affects knowledge sharing within teams. Our findings show that an FDRS increases the speed of completing the card sequencing task when working alone and decreases the speed of completing the card sequencing task when working in a team. Beyond that, we find that an FDRS also significantly decreases knowledge sharing within teams. As the FDRS was perceived as unfair in collaborative settings but not when working alone, we provide evidence on the role of perceived justice concerning the effects of an FDRS and shed light on the psychological and economic consequences of introducing an FDRS in environments where team collaboration is essential for success.

The Difference Between Saying and Doing: Comparing Subjective and Objective Measures of Effort Among Fifth Graders

The first goal of this study is to examine the capacity of prominent survey-based effort proxies to predict real effort provision in children. Do children who “talk the talk” of hard work also “walk the walk” and make costly effort investments? The second goal is to assess how objective and subjective effort measures are related under two conditions: intrinsic (nonincentivized) motivation and extrinsic (incentivized) motivation. We measure objective “real” effort using three tasks and subjective self-reported effort using four psychological characteristics (conscientiousness, need for cognition, locus of control and delay of gratification) to understand to what extent material incentives affect the cognitive effort of children with different self-reported personalities. Data stem from real-effort experiments carried out with 420 fifth grade students from primary schools in Madrid, Spain. We find that some of the subjective and objective effort measures are positively correlated. Yet the power of personality to predict real effort is only moderate, but greater and more so in the extrinsic than the intrinsic motivation condition. In particular, need for cognition and conscientiousness are the most relevant correlates of objective effort. Overall, we find there is a big difference between saying and doing when it comes to exerting effort, and this difference is even larger when there are no direct material incentives in place to reward effort provision.