Real-effort Experiment Research Articles

In Control or under Control? Human-Robot Collaboration in Warehouse Order Picking

Warehouse operations are rapidly becoming more robotized to increase performance and cut costs. One important new way of working is in collaboration between humans and robots. However, even though humans and their behavior remain essential for operational performance, human factors in human-robot collaboration are still underrepresented in Operations Management literature. To contribute to the scarce knowledge in this domain, we conducted a unique real-effort experiment in a warehouse especially erected for this study. In this experiment we compare the objective outcomes of collaborative productivity, collaborative accuracy, and human pick speed between a scenario with the human leading the robot and a scenario with the human following the robot. Furthermore, we investigate the behavioral mechanism that governs the reaction of humans to the novel collaboration with robots. We find that human leading allows for superior collaborative order picking productivity compared to human following. In contrast, human following allows for greater collaborative order picking accuracy compared to human leading. We additionally establish prevention regulatory focus as the behavioral mechanism through which workers may accelerate their pick speed to bridge the productivity gap between the setups. Finally, we confirm that competence in manual order picking is directly transferable to the human-robot collaborative environment.

Labor Supply, Taxation, and the Use of Tax Revenues: A Real-Effort Experiment in Canada, France, and Germany

We experimentally investigated three variants of a real-effort game with taxation that differed in the degree of redistribution of tax revenue. Concretely, we compared a Leviathan scenario, where no tax is redistributed, with a situation where tax revenues are used to finance a public good involving neither a direct nor immediate monetary transfer to participants and with a scenario where direct transfer payments are made to each participant. Our results confirm previous findings of a nonlinear decreasing relationship between tax rate and work effort. We found that, for tax rates above 50 percent, the level of effort was highest under direct redistribution, followed by the public-good scenario, and by the Leviathan case. Conducting the experiment in Canada, France, and Germany, we observed average effort (and thus tax revenues) to be higher in France than in Canada and Germany.

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.

The timing of discretionary bonuses – effort, signals, and reciprocity

In a real-effort experiment, we investigate the relationship between reciprocity and the timing of discretionary bonuses in a two-period principal-agent (manager-worker) setting. We vary the timing of the manager's bonus decision in order to examine two main channels, reward and trust, through which discretionary bonuses may operate. Average worker performance improves when bonus decisions are made between the two periods, since both channels are simultaneously active. First-period output significantly increases as workers attempt to signal their trustworthiness to managers. When the bonus decision is made upfront or at the end, average output is no different than in a baseline setting without the bonus mechanism. Furthermore, output after a bonus is not paid decreases substantially, consistent with negative reciprocity. Our main findings are reinforced by using time spent on the available real leisure activity as an alternative measure of subjects' effort.

Striking a Balance: Revenue Drift, Incentives, and Effort Allocation in Social Enterprises

Social enterprises often exhibit revenue drift, i.e. an excessive focus on purpose at the expense of profits. Despite the threats this poses for organizational performance and survival, social entrepreneurs are reluctant to use performance-based pay due to the perceived incongruence of incentives with social impact and the risk of mission drift. We argue that monetary incentives can elicit a balanced effort allocation by redirecting employee effort to commercial tasks and by attracting workers who are less prone to exerting excessive social effort. We vary incentive strength in an online, real-effort experiment and find that both modest and strong incentives produce a more balanced effort allocation by redirecting worker attention to commercial tasks. While strong incentives lead to a small decrease in workers' social motivation, modest incentives do not affect social enterprise workforce composition. Social enterprises that combine mission and monetary rewards not only attract more workers, but also succeed in directing worker attention to both commercial and social tasks.

Cash, non-cash, or mix? Gender matters! The impact of monetary, non-monetary, and mixed incentives on performance

Standard economic theory asserts that cash incentives are always better than non-cash ones, or at least not worse. This study employs a real effort experiment to analyze the impact of monetary, non-monetary, and a combination of monetary and non-monetary incentives on performance, where non-monetary incentives are defined as tangible incentives with market value. Our overall results suggest that there exists no significant difference in performance in response to monetary, non-monetary, and mixed incentives. However, gender-based differentiation reveals a different picture: the performances of men and women depend upon the type of incentive used. Whereas men’s performance is significantly higher in response to monetary incentives compared to non-monetary ones, women’s performance is significantly higher in response to non-monetary incentives. The gender differences in the effectiveness of monetary and non-monetary incentives do not seem to be triggered by the perceived attractiveness of the non-monetary incentives but rather by the differences between men and women in the feelings of appreciation and perceived performance pressure in a tournament setting. Therefore, our results indicate that gender differences must be considered when implementing incentives.

Fair payments for effective environmental conservation

Global efforts for biodiversity protection and land use-based greenhouse gas mitigation call for increases in the effectiveness and efficiency of environmental conservation. Incentive-based policy instruments are key tools for meeting these goals, yet their effectiveness might be undermined by such factors as social norms regarding whether payments are considered fair. We investigated the causal link between equity and conservation effort with a randomized real-effort experiment in forest conservation with 443 land users near a tropical forest national park in the Vietnamese Central Annamites, a global biodiversity hotspot. The experiment introduced unjustified payment inequality based on luck, in contradiction of local fairness norms that were measured through responses to vignettes. Payment inequality was perceived as less fair than payment equality. In agreement with our preregistered hypotheses, participants who were disadvantaged by unequal payments exerted significantly less conservation effort than other participants receiving the same payment under an equal distribution. No effect was observed for participants advantaged by inequality. Thus, equity effects on effort can have consequences for the effectiveness and efficiency of incentive-based conservation instruments. Furthermore, we show that women exerted substantially more conservation effort than men, and that increasing payment size unexpectedly reduced effort. This emphasizes the need to consider social comparisons, local equity norms, and gender in environmental policies using monetary incentives to motivate behavioral change.

Intra-household inequality, fairness and productivity. Evidence from a real effort experiment

Abstract This paper investigates experimentally how changes in wage rates and entitlements affect individual productivity in lab-in-the-field experiments run with married couples from rural regions in Uganda. We design a game in which the production task itself is straightforward, but where the rules governing payment vary across subjects and between rounds. In some cases, all the value of output goes to the husband; in other cases all goes to the wife; in other cases the value of output is shared equally and finally in some cases each spouse receives income according to only their own output. To consider the effects of wage inequality we vary the price paid for each completed item so that the ratio of male to female wages varies from 0.5 to 2. All this is done transparently so that both partners know the rules of the game. The results generally indicate that a rise in relative wages lowers relative effort, a result that is contrary to the most straightforward interpretation of standard models of the household, but compatible with some models of fairness. Men do not generally respond strongly to treatment. In contrast, women’s labor supply is strongly backward bending when all income goes to the husband, but effort rises with wages when each spouse gets to keep their own earnings. The results therefore suggest that the effects of reforming or removing one inequality may depend critically on the existence of other inequalities.

Motivational goal bracketing: An experiment

We study theoretically and experimentally how the bracketing of non-binding goals in a repeated task affects the level of goals that people set for themselves, the actual effort provided, and the pattern of effort over time. In our model, a sophisticated or partially naïve individual sets either daily or weekly goals to overcome a motivational problem caused by present-biased preferences. In an online, real-effort experiment, we randomly allocated subjects to treatments where they set either daily goals for how much to work over a one-week period or a single weekly goal. Consistent with the theoretical predictions, in the treatment with daily goals, the aggregate goal level for the week was higher and subjects provided more effort compared to the treatment with a weekly goal. The higher effort was driven by the higher aggregate goal level. Additional treatments complemented internal commitment through goals with an externally enforced minimum work requirement to get started working each day.

On the Collective Choice among Models of Social Protection: An Experimental Study

A real-effort experiment is conducted in order to detect preferences for one out of three different models of the Welfare State characterized by different tax-and-transfer schemes. We reproduce a small society in the lab where: Subjects are grouped in three stylized classes (the rich, the middle class and the poor) on the basis of their performance in a real-effort activity; income and risk are assigned according to the class; tax revenue is spent to refund unlucky people and to provide a public good. Experimental subjects must choose (both under and without a veil of ignorance concerning their position in the society created in the lab) among (a) a baseline proportional scheme, where the State is neutral with respect to risk heterogeneity; (b) an actuarially fair scheme where low ability and low earnings subjects bear full individual responsibility for risk exposure and (c) a progressive scheme where mutual risk insurance spreads risk across all subjects such that low ability and low earnings individuals are compensated. Our most relevant finding is that preference is motivated less by a justice principle and more by self-interested considerations on the expectations surrounding one’s own position in the society.

Costly voting: a large-scale real effort experiment

We test the turnout predictions of the canonical costly voting model through a large-scale, real effort experiment. We recruit 1200 participants through Amazon’s Mechanical Turk and employ a $$2\times 2$$ between subjects design encompassing small ($$N=30$$) and large ($$N=300$$) elections, as well as close and lopsided. As predicted, participants with a higher opportunity cost are less likely to vote; turnout rate decreases as the electorate size increases in lopsided elections and increases the closer the election is in large elections. However, in the large lopsided election the majority turns out to vote at a higher rate than the minority. We rationalize these results as the equilibrium outcome of a model in which voters obtain a small non-monetary utility if they vote and their party wins.

Winner Take All or Play it Safe? Effect of Loss Aversion and Prosocial Motivations on Choice of Incentive Structure

We investigate the interaction effects of prosocial incentives and loss aversion on entry into and performance within competitive environments within the context of a real-effort experiment. When competing in the gain domain, individuals are less likely to enter into a competitive winner-take-all tournament if they are competing for a prosocial cause versus for themselves. When individuals are given a resource endowment up front and real losses are incurred, we find the opposite effect, individuals are more likely to enter competition for a prosocial cause than for themselves. These findings add to extant literature on prosocial incentives and competitive entry, which have mainly focused upon incentives that are framed as gains. This study contributes to the strategic human capital literature by investigating the differential effects of pecuniary incentives and productivity and provides implications for organizations in how they incentivize and develop human talent.

Persistent Sunk Cost Fallacy in a Real Effort Experiment

Subjects chose whether to leave with an endowment or stay to perform some simple tasks in a real effort experiment. In addition to performance pay, staying subjects received their endowment in the control condition, but had to sacrifice it in the treatment condition. We found average performance of staying subjects, after controlling for selection effects, was higher in the treatment condition. Further, the sunk cost effect persisted well after the decision as to whether to stay or leave had been made. JEL Classification: D24, D83, J24

Effectiveness and equity of Payments for Ecosystem Services: Real-effort experiments with Vietnamese land users

Payments for Ecosystem Services (PES) are widespread in conservation policy. In PES, environmental effectiveness and social equity are often perceived as conflicting goals. Empirical studies on the relationship between popular design features, such as payment differentiation and payment conditionality, and effectiveness and equity are scarce. Further, they struggle with measuring and separating ecological and equity outcomes. In this study, we combine two incentivized lab-in-the-field experiments with 259 land users from eight villages in North-Western Vietnam to assess both individual conservation effort and community-level equity perceptions under four different PES designs. Effort is measured in a real-effort task with real-world environmental benefits; equity perceptions about payment designs in the real-effort task are measured in a coordination game. We demonstrate that payment design affects both effort and equity perceptions. Payments which are differentiated and are solely conditional on individuals’ contributions of effort are perceived as most equitable. They are also more effective in motivating conservation effort than other designs, although the differences are small and not significant for all comparisons. By working out the positive correlation of effectiveness and equity across the four payment schemes, we show that these objectives are not necessarily conflicting goals in incentive-based conservation policy. Further, we can show that women exert greater conservation efforts. We discuss how greater equity and effectiveness could be achieved with reforms towards more input-based distribution criteria in Vietnam’s PES legislation and the limitations and opportunities of the experimental paradigm for research on PES.

Unethical behavior and group identity in contests

Using a real-effort experiment, we study whether group identity affects unethical behavior in a contest game. We vary whether minimal group identity is induced or not, whether individuals have to report their own outcome or the outcome of their competitor, and whether pairs of competitors share the same group identity or not. We show that individuals misreport in the same proportion and to the same extent by inflating their outcome or by decreasing their opponent’s outcome, except when any possible scrutiny by the experimenter is removed. Regardless of the possibility of scrutiny by the experimenter, misreporting is affected neither by the competitor’s group identity nor by the individual’s beliefs about others’ misreporting behavior. This suggests that in competitive settings, unethical behavior is mainly driven by an unconditional desire to win.

Applying for jobs in the lab: The effect of risk attitudes and reference points

Applying for jobs resembles entering a lottery, where there is an up-front cost of entering and a large potential award gained with some probability. Reference-dependent models predict that the risk attitudes people have toward these types of lotteries will depend on what reference point they use. In this paper, we consider whether a job-application setting in the laboratory can give rise to strong loss aversion and application avoidance. We test for this in a real-effort experiment where we observe application decisions for a job paying a bonus conditional on different levels of an application fee. We also implement a neutral monetary lottery with the same consequential decisions. Our experimental evidence reveals substantial reluctance to take on risk in job applications, but to an extent similar to that found in lottery entry decisions. We do not find support for application avoidance.

The Hidden Cost of Using CSR to Motivate Workers

This paper experimentally investigates whether firms should use both prosocial incentives and monetary incentives to motivate workers. We conduct a real-effort experiment on a data entry job. It is found that prosocial incentives will likely reduce work quality. When worker’s compensation does not include prosocial incentives, making the compensation conditional on the quality of work performed greatly enhanced the work quality. However, when worker’s compensation includes prosocial incentive, making the compensation conditional on the work quality no longer improve work quality. This suggests that prosocial incentive induces some workers to work less professionally.

Scorecards, Rankings and Gateways: Remuneration and Conduct in Financial Services

The financial services industry typically provides performance pay to staff – a practice that has been linked to misconduct. This lab-in-the-field, real-effort experiment with 318 finance professionals investigates the impact of performance pay on behaviour, in an environment where compliance with policy is imperfectly monitored. For the first time we examine the remuneration structures which have been proposed by the industry and its regulators to mitigate misconduct: the balanced scorecard and the compliance gateway. Relative to fixed remuneration, both these remuneration structures produce significantly worse compliance outcomes. The study also examines the role of relative performance information which is found to boost productivity. Peer feedback has no significant impact on the proportion of participants choosing to comply with policy, but for those who sometimes violate policy, peer feedback reduces the compliance rate. Membership of a professional association has no significant impact on the proportion choosing to comply throughout, but for those who sometimes violate policy, members have higher compliance rates than non-members. Perceptions of peer compliance predict actual compliance behaviour in all treatments, highlighting the importance of social norms or culture for behavioural outcomes.

Will You Work or Will You Shirk? How Expectations About Teammates Influence Team Performance

This paper introduces heterogeneity of team members’ preferences towards inequality of effort choices. While some prefer working more than their teammates (“worker-types”) others prefer working less (“shirker-types”). Extending Fehr and Schmidt (1999) we assume that these preferences are private knowledge and team members form expectations about teammates’ preferences. A simple theoretical model identifies the interplay of expected preferences and optimum effort choices in a Bayesian Nash equilibrium, its predictions are partly supported by data from a real-effort experiment. We find that expecting worker-type teammates can spur team performance, providing a strong argument for team building measures.

Unethical Behavior and Group Identity in Contests

Using a real-effort experiment, we study whether group identity affects unethical behavior in a contest game. We vary whether minimal group identity is induced or not, whether individuals have to report their own outcome or the outcome of their competitor, and whether pairs of competitors share the same group identity or not. We show that individuals misreport in the same proportion and to the same extent by inflating their outcome or by decreasing their opponent's outcome, except when any possible scrutiny by the experimenter is removed. Regardless of the possibility of scrutiny by the experimenter, misreporting is affected neither by the competitor's group identity nor by the individual's beliefs about others' misreporting behavior. This suggests that in competitive settings, unethical behavior is mainly driven by an unconditional desire to win.