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The Effect of Monetary Incentives on Cognitive Effort, Emotions and Test-Solving Performance

Author

Listed:
  • Juan F. Castro

    (Universidad del Pacífico)

  • Gustavo Yamada

    (Universidad del Pacífico)

  • Hans Contreras

    (Universidad Nacional Mayor de San Marcos)

  • Freddy Linares

    (Neurometrics)

  • Herwig Watson

    (Neurometrics)

Abstract

The relation between monetary incentives, cognitive effort and task performance has been extensively studied. There is, however, scant experimental evidence about the concurrent effect of incentives on cognitive effort and emotions, and its implications for task performance. It is well documented that high-stakes tests correlate with students’ anxiety and performance, but the available evidence is not causal. In this paper we estimate the effect of providing a monetary prize on the cognitive effort, emotions and efficacy exhibited by a group of university students when solving a set of four mathematics and logical reasoning questions. The prize was conditional on answering all questions correctly and was randomly assigned within a group of 126 participants. We find that the incentive produced more cognitive effort but this did not translate into increased test-solving efficacy. We provide evidence suggesting that the absence of increased efficacy despite the greater input of cognitive effort can be linked to the participants’ emotional response to the prize.

Suggested Citation

  • Juan F. Castro & Gustavo Yamada & Hans Contreras & Freddy Linares & Herwig Watson, 2018. "The Effect of Monetary Incentives on Cognitive Effort, Emotions and Test-Solving Performance," Working Papers 131, Peruvian Economic Association.
    • Handle: RePEc:apc:wpaper:131
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    References listed on IDEAS

    as
    1. Bonner, Sarah E. & Sprinkle, Geoffrey B., 2002. "The effects of monetary incentives on effort and task performance: theories, evidence, and a framework for research," Accounting, Organizations and Society, Elsevier, vol. 27(4-5), pages 303-345.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cognitive effort; emotions; monetary incentives; eye-tracking; facial expressions;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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