One conjecture in the theory of incentives is that incentives based on broader outcomes may be better at motivating agents than incentives based on narrow measures. We designed an experiment to test these hypotheses using a “prospective randomized evaluation procedure” (PREP). We then apply PREP to training programs as typically funded by donors of economic development assistance. We randomly assigned 274 participating entrepreneurs in the Philippines to one of 26, simultaneous, one-day, training classes in marketing. Trainers were given cash incentives based on the average score of their “students” on a standardized test containing an alternative number of questions, which were randomly assigned to each class. We then examined outcomes based on student satisfaction ratings of the trainer. Our results suggest that incentives based on broad outcomes are more effective than incentives based on narrow outcomes. We conclude with ways to improve our approach as well as with a discussion of the implications for using prospective randomized evaluation for improving the evaluation of donor projects.
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Paper provided by The Field Experiments Website in its series Natural Field Experiments with number
0011.
Find related papers by JEL classification: H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments I20 - Health, Education, and Welfare - - Education - - - General L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out O22 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
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Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000.
"Measuring Trust,"
The Quarterly Journal of Economics,
MIT Press, vol. 115(3), pages 811-846, August.
[Downloadable!] (restricted)
Paul Glewwe & Nauman Ilias & Michael Kremer, 2003.
"Teacher Incentives,"
NBER Working Papers
9671, National Bureau of Economic Research, Inc.
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