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The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework

Camerer, Colin F. and Hogarth, Robin M. (1999) The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework. Social Science Working Paper, 1059. California Institute of Technology , Pasadena, CA. (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20171129-161418280

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Abstract

We review 74 experiments with no, low, or high performance-based financial incentives. The modal result has no effect on mean performance (though variance is usually reduced by higher payment). Higher incentive does improve performance often, typically judgment tasks that are responsive to better effort. Incentives also reduce “presentation” effects (e.g., generosity and risk-seeking). Incentive effects are comparable to effects of other variables, particularly “cognitive capital” and task “production” demands, and interact with those variables, so a narrow-minded focus on incentives alone is misguided. We also note that no replicated study has made rationality violations disappear purely by raising incentives.


Item Type:Report or Paper (Working Paper)
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http://resolver.caltech.edu/CaltechAUTHORS:20110208-132914477Related ItemPublished Article
ORCID:
AuthorORCID
Camerer, Colin F.0000-0003-4049-1871
Additional Information:Very helpful comments were received from Baruch Fischhoff, Reid Hastie, John Kagel, Daniel Kahneman, George Loewenstein, Rob MacCoun, Chuck Manski, Richard Thaler, two anonymous referees, and many participants in the NSF/Berkeley Econometrics Lab conference on elicitation of preferences, July/August 1997. Angela Hung provided meticulous research assistance. Published as Camerer, Colin F. and Hogarth, Robin M. (1999) The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework. Journal of Risk and Uncertainty, 19 (1-3). pp. 7-42.
Group:Social Science Working Papers
Series Name:Social Science Working Paper
Issue or Number:1059
Record Number:CaltechAUTHORS:20171129-161418280
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20171129-161418280
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:83580
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:30 Nov 2017 00:25
Last Modified:03 Oct 2019 19:08

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