Matthew Bietz —  January 17, 2007 — Leave a comment

I’m thinking today about incentives. In my first experiment, subjects were given the incentive that the PPT they created would be graded on a scale of 1 to 10, and if they received a 10, they would get a $5 bonus, a 9 would earn $4, down to a 6 would earn $1 bonus. The point of the incentive is to give participants a financial as well as intrisic motivation to do well at the task. Essentially, I want to give them a reason to think about the feedback and the process. This also gives them motivation to spend time editing the document before they turn it in.

I’ve been wondering whether I want to change the incentive. I could tell subjects that anyone whose graded essays are in the top X% of all the essays would get a $5 bonus. There are two changes here. First, it’s an all or nothing bonus, rather than having gradations. Second, the bonus would also include an element of competition among the participants. I’m not sure if this would be good or bad–in some ways I could see it happening that subjects would start monitoring each other for cues about how much work to give (especially since I’m planning on running several subjects at a time in parallel).

I talked to Yan Chen about this a bit today, and she didn’t have a strong opinion about which option I should use. She pointed me to a review article:

  • Camerer, Colin F., and Robin Hogarth. 1999. “The Effects of Financial Incentives in Economics Experiments: A Review and Capital-Labor-Production Framework.” Journal of Risk and Uncertainty, 7-42.

I think for the time being I’m going to keep the incentives the same (not the least so that I have as much commonality as possible with the first experiment).

Matthew Bietz


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