IDEAS home Printed from https://ideas.repec.org/p/ajk/ajkdps/187.html
   My bibliography  Save this paper

The Targeted Assignment of Incentive Schemes

Author

Listed:
  • Saskia Opitz

    (University of Cologne, Faculty of Management, Economics and Social Sciences, Department of Corporate Development)

  • Dirk Sliwka

    (University of Cologne, Faculty of Management, Economics and Social Sciences, Department of Corporate Development)

  • Timo Vogelsang

    (Frankfurt School of Finance & Management,Department of Accounting)

  • Tom Zimmermann

    (University of Cologne, Faculty of Management, Economics and Social Sciences, Department of Corporate Development)

Abstract

A central question in designing optimal policies concerns the assignment of individuals with different observable characteristics to different treatments. We study this question in the context of increasing workers’ performance by using targeted incentives based on measurable worker characteristics. To do so, we ran two large-scale experiments. The key results are that (i) performance can be predicted by accurately measured personality traits, (ii) a machine learning algorithm can detect such heterogeneity in worker responses to different schemes, and (iii) a targeted assignment of schemes to individual workers increases performance in a second experiment significantly above the level achieved by the single best scheme.

Suggested Citation

  • Saskia Opitz & Dirk Sliwka & Timo Vogelsang & Tom Zimmermann, 2022. "The Targeted Assignment of Incentive Schemes," ECONtribute Discussion Papers Series 187, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:187
    as

    Download full text from publisher

    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_187_2022.pdf
    File Function: First version, 2022
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. John Horton & David Rand & Richard Zeckhauser, 2011. "The online laboratory: conducting experiments in a real labor market," Experimental Economics, Springer;Economic Science Association, vol. 14(3), pages 399-425, September.
    2. A. Stefano Caria & Grant Gordon & Maximilian Kasy & Simon Quinn & Soha Shami & Alexander Teytelboym, 2020. "An Adaptive Targeted Field Experiment: Job Search Assistance for Refugees in Jordan," CSAE Working Paper Series 2020-20, Centre for the Study of African Economies, University of Oxford.
    3. Fallucchi, Francesco & Nosenzo, Daniele & Reuben, Ernesto, 2020. "Measuring preferences for competition with experimentally-validated survey questions," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 402-423.
    4. Stefan Wager & Susan Athey, 2018. "Estimation and Inference of Heterogeneous Treatment Effects using Random Forests," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 113(523), pages 1228-1242, July.
    5. Gilles Grolleau & Martin G. Kocher & Angela Sutan, 2014. "Cheating and Loss Aversion: Do People Lie More to Avoid a Loss?," CESifo Working Paper Series 4965, CESifo.
    6. Stefano DellaVigna & Devin Pope, 2018. "What Motivates Effort? Evidence and Expert Forecasts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 1029-1069.
    7. Josse Delfgaauw & Robert Dur & Joeri Sol & Willem Verbeke, 2013. "Tournament Incentives in the Field: Gender Differences in the Workplace," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 305-326.
    8. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 917-962.
    9. Armin Falk & Anke Becker & Thomas Dohmen & David Huffman & Uwe Sunde, 2023. "The Preference Survey Module: A Validated Instrument for Measuring Risk, Time, and Social Preferences," Management Science, INFORMS, vol. 69(4), pages 1935-1950, April.
    10. Gilles Grolleau & Martin G. Kocher & Angela Sutan, 2016. "Cheating and Loss Aversion: Do People Cheat More to Avoid a Loss?," Management Science, INFORMS, vol. 62(12), pages 3428-3438, December.
    11. Guido Friebel & Matthias Heinz & Miriam Krueger & Nikolay Zubanov, 2017. "Team Incentives and Performance: Evidence from a Retail Chain," American Economic Review, American Economic Association, vol. 107(8), pages 2168-2203, August.
    12. Toru Kitagawa & Aleksey Tetenov, 2018. "Who Should Be Treated? Empirical Welfare Maximization Methods for Treatment Choice," Econometrica, Econometric Society, vol. 86(2), pages 591-616, March.
    13. Jonathan Quidt & Francesco Fallucchi & Felix Kölle & Daniele Nosenzo & Simone Quercia, 2017. "Bonus versus penalty: How robust are the effects of contract framing?," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 3(2), pages 174-182, December.
    14. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2007. "Incentives for Managers and Inequality among Workers: Evidence from a Firm-Level Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(2), pages 729-773.
    15. Olivier Armantier & Amadou Boly, 2015. "Framing Of Incentives And Effort Provision," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 917-938, August.
    16. Tanjim Hossain & John A. List, 2012. "The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations," Management Science, INFORMS, vol. 58(12), pages 2151-2167, December.
    17. Steven D. Levitt & John A. List & Susanne Neckermann & Sally Sadoff, 2016. "The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 183-219, November.
    18. Thomas Dohmen & Armin Falk, 2011. "Performance Pay and Multidimensional Sorting: Productivity, Preferences, and Gender," American Economic Review, American Economic Association, vol. 101(2), pages 556-590, April.
    19. Jeffrey Carpenter & Erick Gong, 2016. "Motivating Agents: How Much Does the Mission Matter?," Journal of Labor Economics, University of Chicago Press, vol. 34(1), pages 211-236.
    20. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2011. "Field Experiments with Firms," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 63-82, Summer.
    21. Lawrence F. Katz & Alan B. Krueger, 2019. "The Rise and Nature of Alternative Work Arrangements in the United States, 1995–2015," ILR Review, Cornell University, ILR School, vol. 72(2), pages 382-416, March.
    22. Henry Eyring & V. G. Narayanan, 2018. "Performance Effects of Setting a High Reference Point for Peer‐Performance Comparison," Journal of Accounting Research, Wiley Blackwell, vol. 56(2), pages 581-615, May.
    23. Ian Larkin & Stephen Leider, 2012. "Incentive Schemes, Sorting, and Behavioral Biases of Employees: Experimental Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 4(2), pages 184-214, May.
    24. Tonin, Mirco & Vlassopoulos, Michael, 2010. "Disentangling the sources of pro-socially motivated effort: A field experiment," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 1086-1092, December.
    25. Eyring, Henry & Narayanan, V.G., 2018. "Performance effects of setting a high reference point for peer-performance comparison," LSE Research Online Documents on Economics 86732, London School of Economics and Political Science, LSE Library.
    26. Edward P. Lazear, 2018. "Compensation and Incentives in the Workplace," Journal of Economic Perspectives, American Economic Association, vol. 32(3), pages 195-214, Summer.
    27. Ashraf, Nava & Bandiera, Oriana & Jack, B. Kelsey, 2014. "No margin, no mission? A field experiment on incentives for public service delivery," Journal of Public Economics, Elsevier, vol. 120(C), pages 1-17.
    28. Jordi Blanes i Vidal & Mareike Nossol, 2011. "Tournaments Without Prizes: Evidence from Personnel Records," Management Science, INFORMS, vol. 57(10), pages 1721-1736, October.
    29. Muriel Niederle & Lise Vesterlund, 2007. "Do Women Shy Away From Competition? Do Men Compete Too Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(3), pages 1067-1101.
    30. Mirco Tonin & Michael Vlassopoulos, 2015. "Corporate Philanthropy and Productivity: Evidence from an Online Real Effort Experiment," Management Science, INFORMS, vol. 61(8), pages 1795-1811, August.
    31. Rau, Holger A., 2014. "The disposition effect and loss aversion: Do gender differences matter?," Economics Letters, Elsevier, vol. 123(1), pages 33-36.
    32. Olivier Armantier & Amadou Boly, 2015. "Framing Of Incentives And Effort Provision," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(3), pages 917-938, August.
    33. Erik Snowberg & Leeat Yariv, 2021. "Testing the Waters: Behavior across Participant Pools," American Economic Review, American Economic Association, vol. 111(2), pages 687-719, February.
    34. R. Lynn Hannan & Vicky B. Hoffman & Donald V. Moser, 2005. "Bonus versus Penalty: Does Contract Frame Affect Employee Effort?," Springer Books, in: Amnon Rapoport & Rami Zwick (ed.), Experimental Business Research, chapter 0, pages 151-169, Springer.
    35. Chen, Daniel L. & Schonger, Martin & Wickens, Chris, 2016. "oTree—An open-source platform for laboratory, online, and field experiments," Journal of Behavioral and Experimental Finance, Elsevier, vol. 9(C), pages 88-97.
    36. Banker, Rajiv D. & Lee, S.-Y.Seok-Young & Potter, Gordon & Srinivasan, Dhinu, 2000. "An empirical analysis of continuing improvements following the implementation of a performance-based compensation plan," Journal of Accounting and Economics, Elsevier, vol. 30(3), pages 315-350, December.
    37. Katherine Donato & Grant Miller & Manoj Mohanan & Yulya Truskinovsky & Marcos Vera-Hernández, 2017. "Personality Traits and Performance Contracts: Evidence from a Field Experiment among Maternity Care Providers in India," American Economic Review, American Economic Association, vol. 107(5), pages 506-510, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Groß, Mona & Hennig-Schmidt, Heike & Wiesen, Daniel, 2023. "Personality and physician performance pay: Evidence from a behavioral experiment in health," HERO Online Working Paper Series 2023:5, University of Oslo, Health Economics Research Programme.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kathrin Manthei & Dirk Sliwka & Timo Vogelsang, 2023. "Talking About Performance or Paying for It? A Field Experiment on Performance Reviews and Incentives," Management Science, INFORMS, vol. 69(4), pages 2198-2216, April.
    2. Butschek, Sebastian & González Amor, Roberto & Kampkötter, Patrick & Sliwka, Dirk, 2022. "Motivating gig workers – evidence from a field experiment," Labour Economics, Elsevier, vol. 75(C).
    3. Mylène Lagarde & Duane Blaauw, 2021. "Effects of incentive framing on performance and effort: evidence from a medically framed experiment," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 7(1), pages 33-48, September.
    4. Gosnell, Greer & Metcalfe, Robert & List, John A, 2016. "A new approach to an age-old problem: solving externalities by incenting workers directly," LSE Research Online Documents on Economics 84331, London School of Economics and Political Science, LSE Library.
    5. Paul J. Ferraro & J. Dustin Tracy, 2022. "A reassessment of the potential for loss-framed incentive contracts to increase productivity: a meta-analysis and a real-effort experiment," Experimental Economics, Springer;Economic Science Association, vol. 25(5), pages 1441-1466, November.
    6. Kathrin Manthei & Dirk Sliwka & Timo Vogelsang, 2021. "Performance Pay and Prior Learning—Evidence from a Retail Chain," Management Science, INFORMS, vol. 67(11), pages 6998-7022, November.
    7. Jakob Alfitian & Dirk Sliwka & Timo Vogelsang, 2021. "When Bonuses Backfire: Evidence from the Workplace," Natural Field Experiments 00725, The Field Experiments Website.
    8. Non, Arjan & Rohde, Ingrid & de Grip, Andries & Dohmen, Thomas, 2022. "Mission of the company, prosocial attitudes and job preferences: A discrete choice experiment," Labour Economics, Elsevier, vol. 74(C).
    9. Brice Corgnet & Roberto Hernán-González, 2019. "Revisiting the Trade-off Between Risk and Incentives: The Shocking Effect of Random Shocks?," Management Science, INFORMS, vol. 65(3), pages 1096-1114, March.
    10. Ahrens, Steffen & Bitter, Lea & Bosch-Rosa, Ciril, 2023. "Coordination under loss contracts," Games and Economic Behavior, Elsevier, vol. 137(C), pages 270-293.
    11. Manthei, Kathrin & Sliwka, Dirk & Vogelsang, Timo, 2018. "Performance Pay and Prior Learning: Evidence from a Retail Chain," IZA Discussion Papers 11859, Institute of Labor Economics (IZA).
    12. Ravid, Oded & Malul, Miki & Zultan, Ro’i, 2021. "Incentives, mission and productivity," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 91(C).
    13. Jonathan Quidt & Francesco Fallucchi & Felix Kölle & Daniele Nosenzo & Simone Quercia, 2017. "Bonus versus penalty: How robust are the effects of contract framing?," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 3(2), pages 174-182, December.
    14. Blasco, Andrea & Jung, Olivia S. & Lakhani, Karim R. & Menietti, Michael, 2019. "Incentives for public goods inside organizations: Field experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 214-229.
    15. Simon Piest & Philipp Schreck, 2021. "Contests and unethical behavior in organizations: a review and synthesis of the empirical literature," Management Review Quarterly, Springer, vol. 71(4), pages 679-721, October.
    16. Manthei, Kathrin & Sliwka, Dirk & Vogelsang, Timo, 2019. "Talking about Performance or Paying for it? Evidence from a Field Experiment," IZA Discussion Papers 12446, Institute of Labor Economics (IZA).
    17. Brice Corgnet & Roberto Hernán González, 2023. "You Will not Regret it: On the Practice of Randomized Incentives," Working Papers 2314, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    18. Heinicke, Franziska & Rosenkranz, Stephanie & Weitzel, Utz, 2019. "The effect of pledges on the distribution of lying behavior: An online experiment," Journal of Economic Psychology, Elsevier, vol. 73(C), pages 136-151.
    19. Jonathan de Quidt, 2018. "Your Loss Is My Gain: A Recruitment Experiment with Framed Incentives," Journal of the European Economic Association, European Economic Association, vol. 16(2), pages 522-559.
    20. Daniele Nosenzo, 2016. "Employee incentives: Bonuses or penalties?," IZA World of Labor, Institute of Labor Economics (IZA), pages 234-234, January.

    More about this item

    Keywords

    Randomized Controlled Trial; Incentives; Heterogeneity; Treatment Effects; Selection; Algorithm;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ajk:ajkdps:187. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ECONtribute Office (email available below). General contact details of provider: https://www.econtribute.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.