On the Relative Efficiency of Performance Pay and Social Incentives
AbstractIn contrast to the simplifying assumption of selfishness, social incentives have been shown to play a role in economic interactions. Before incorporating social incentives into models and policies, however, one needs to know their efficiency relative to standard pay-for-performance incentives. We report evidence from a large field experiment comparing the effectiveness of contingent and non-contingent (“social”) incentives in eliciting costly effort. The company with which we worked sent 7,250 letters asking customers to complete a survey. Some letters contained cash amounts ranging from $1 to $30, whereas others promised to pay upon compliance. We compare the response rates and cost effectiveness of these contingent and social incentives with each other and with a no-incentives control. In line with previous findings, we find that social incentives generated some effort: small amounts increased the response rate with respect to the control, but the size of the reward had a relatively minor effect. In contrast, the response rate for contingent incentives was low for small amounts but increased rapidly as incentives increased. Importantly, for (almost) any given response rate social incentives were more costly than contingent incentives.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 585.
Date of creation: Oct 2011
Date of revision:
contingent incentives; gift exchange;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-15 (All new papers)
- NEP-CBE-2012-05-15 (Cognitive & Behavioural Economics)
- NEP-EXP-2012-05-15 (Experimental Economics)
- NEP-HRM-2012-05-15 (Human Capital & Human Resource Management)
- NEP-LAB-2012-05-15 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John List, 2006.
"The behavioralist meets the market: Measuring social preferences and reputation effects in actual transactions,"
Natural Field Experiments
00300, The Field Experiments Website.
- John A. List, 2006. "The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 1-37, February.
- John A. List, 2005. "The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions," NBER Working Papers 11616, National Bureau of Economic Research, Inc.
- Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
- Matthias Benz & Stephan Meier, 2008.
"Do people behave in experiments as in the field?—evidence from donations,"
Springer, vol. 11(3), pages 268-281, September.
- Matthias Benz & Stephan Meier, . "Do People Behave in Experiments as in the Field? – Evidence from Donations," IEW - Working Papers 248, Institute for Empirical Research in Economics - University of Zurich.
- Matthias Benz & Stephan Meier, 2006. "Do people behave in experiments as in the field?: evidence from donations," Working Papers 06-8, Federal Reserve Bank of Boston.
- Uri Gneezy & John A List, 2006.
"Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments,"
Econometric Society, vol. 74(5), pages 1365-1384, 09.
- Uri Gneezy & John List, 2006. "Putting behavioral economics to work: Testing for gift exchange in labor markets using field experiments," Natural Field Experiments 00259, The Field Experiments Website.
- Uri Gneezy & John A. List, 2006. "Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments," NBER Working Papers 12063, National Bureau of Economic Research, Inc.
- Tonin, Mirco & Vlassopoulos, Michael, 2012.
"Social Incentives Matter: Evidence from an Online Real Effort Experiment,"
IZA Discussion Papers
6716, Institute for the Study of Labor (IZA).
- Mirco Tonin & Michael Vlassopoulos, 2012. "Social Incentives Matter: Evidence from an Online Real Effort Experiment," CEU Working Papers 2012_12, Department of Economics, Central European University, revised 20 Jul 2012.
- Mirco Tonin & Michael Vlassopoulos, 2013. "Social Incentives Matter: Evidence from an Online Real Effort Experiment," Working Papers 2013.05, Fondazione Eni Enrico Mattei.
- Tonin, Mirco & Vlassopoulos, Michael, 2012. "Social Incentives Matter: Evidence from an Online Real Effort Experiment," AICCON Working Papers 112-2012, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Guallar).
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.