Decision Making Costs and Problem Solving Performance
AbstractWe report the results from an experimental study of how problem solving behavior is affected by financial rewards. We formulate three alternative hypotheses: costly rationality, extrinsic/intrinsic trade-off, and distraction effects. Subjects play a computerized version of the Tower-of-Hanoi game and report their beliefs about the optimal solution through a quadratic scoring rule. Subjects participate in one of two treatments: a high penalty and a low penalty. We find that eliciting beliefs, in addition to observing playing behavior, reveals useful information about subjects' cognitive behavior. We reject our hypothesis that the increase in the extrinsic penalty affects the intrinsic valuation in such a way as to decrease the amount of effort applied. Copyright Kluwer Academic Publishers 2001
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Bibliographic InfoArticle provided by Springer in its journal Experimental Economics.
Volume (Year): 4 (2001)
Issue (Month): 2 (October)
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Web page: http://www.springerlink.com/link.asp?id=102888
experiments; financial incentives; quadratic scoring rule;
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