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Multitasking, Learning, and Incentives: A Cautionary Tale

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  • Roland G. Fryer, Jr
  • Richard T. Holden

Abstract

We develop a multi-period, multi-task principal-agent model in which neither the principal nor the agent knows the mapping from actions to outputs. The agent can learn about the production function over time by exerting effort and observing output. The model has a stark prediction: incentives may have a negative impact on agent effort if, by exerting effort, they learn their ability is lower than their prior beliefs. To provide evidence on the model’s predictions, we conduct a field experiment in fifty Houston public schools, where students, parents, and teachers were rewarded with financial incentives. The experimental data is consistent with the model’s most distinguishing predictions, though other explanations are possible.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17752.

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Date of creation: Jan 2012
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Handle: RePEc:nbr:nberwo:17752

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  1. Harry J. Paarsch & Bruce S. Shearer, 1996. "Piece Rates, Fixed Wages, and Incentive Effects: Statistical Evidence from Payroll Records," CIRANO Working Papers 96s-31, CIRANO.
  2. Kremer, Michael Robert & Miguel, Edward A. & Thorton, Rebecca L, 2004. "Incentives to Learn," Center for International and Development Economics Research, Working Paper Series qt9kc4p47q, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  3. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39 - 77.
  4. Felipe Barrera-Osorio & Marianne Bertrand & Leigh L. Linden & Francisco Perez-Calle, 2008. "Conditional Cash Transfers in Education Design Features, Peer and Sibling Effects Evidence from a Randomized Experiment in Colombia," NBER Working Papers 13890, National Bureau of Economic Research, Inc.
  5. Behrman, Jere R & Sengupta, Piyali & Todd, Petra, 2005. "Progressing through PROGRESA: An Impact Assessment of a School Subsidy Experiment in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 237-75, October.
  6. Roland G. Fryer, Jr, 2010. "Financial Incentives and Student Achievement: Evidence from Randomized Trials," NBER Working Papers 15898, National Bureau of Economic Research, Inc.
  7. Eric P. Bettinger, 2012. "Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 686-698, August.
  8. Michael Kremer & Edward Miguel & Rebecca Thornton, 2004. "Incentives to learn," Natural Field Experiments 00289, The Field Experiments Website.
  9. repec:feb:natura:0004 is not listed on IDEAS
  10. Joshua Angrist & Daniel Lang & Philip Oreopoulos, 2006. "Lead Them to Water and Pay Them to Drink: An Experiment with Services and Incentives for College Achievement," NBER Working Papers 12790, National Bureau of Economic Research, Inc.
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Cited by:
  1. Bas ter Weel & Lex Borghans (Maastricht University)............ Huub Meijers (Maastricht University), 2013. "The importance of intrinsic and extrinsic motivation for measuring IQ," CPB Discussion Paper 231, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Uschi Backes-Gellner & Yvonne Oswald, 2012. "Learning for a bonus: How financial incentives interact with preferences," Economics of Education Working Paper Series 0079, University of Zurich, Institute for Strategy and Business Economics (ISU).

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