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Hidden Benefits of Reward: A Field Experiment on Motivation and Monetary Incentives

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  • Ola Kvaløy
  • Petra Nieken
  • Anja Schöttner

Abstract

We conduct a field experiment in a controlled work environment to investigate the effect of motivational talk and its interaction with monetary incentives. We find that motivational talk significantly improves performance only if it is accompanied by performance pay. Moreover, performance pay reduces performance unless it is accompanied by motivational talk. By adding motivational sentences to an otherwise neutral explanation of the work task, the effect of performance pay goes from slightly negative to significantly positive. Hence, we find what we call a hidden benefit of monetary rewards: complementarity between performance pay and motivational talk.

Suggested Citation

  • Ola Kvaløy & Petra Nieken & Anja Schöttner, 2013. "Hidden Benefits of Reward: A Field Experiment on Motivation and Monetary Incentives," CESifo Working Paper Series 4393, CESifo.
    • Handle: RePEc:ces:ceswps:_4393
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    References listed on IDEAS

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    Cited by:

    1. Petra Nieken, 2022. "Digital leadership: Motivating online workers," IZA World of Labor, Institute of Labor Economics (IZA), pages 498-498, September.
    2. Niklas Kühl & Marius Mühlthaler & Marc Goutier, 2020. "Supporting customer-oriented marketing with artificial intelligence: automatically quantifying customer needs from social media," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(2), pages 351-367, June.
    3. Michael Kosfeld & Susanne Neckermann & Xiaolan Yang, 2017. "The Effects Of Financial And Recognition Incentives Across Work Contexts: The Role Of Meaning," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 237-247, January.
    4. Armouti-Hansen, Jesper & Cassar, Lea & Deréky, Anna & Engl, Florian, 2024. "Efficiency wages with motivated agents," Games and Economic Behavior, Elsevier, vol. 145(C), pages 66-83.
    5. Robert Dur & Ola Kvaløy & Anja Schöttner, 2022. "Leadership Styles and Labor Market Conditions," Management Science, INFORMS, vol. 68(4), pages 3150-3168, April.
    6. Casoria, Fortuna & Riedl, Arno & Werner, Peter, 2020. "Behavioral Aspects of Communication in Organizations," IZA Discussion Papers 13005, Institute of Labor Economics (IZA).
    7. Christiane Bradler & Susanne Neckermann, 2019. "The Magic of the Personal Touch: Field Experimental Evidence on Money and Appreciation as Gifts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(3), pages 1189-1221, July.
    8. Gjedrem, William Gilje & Rege, Mari, 2017. "The effect of less autonomy on performance in retail: Evidence from a quasi-natural field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 76-90.
    9. Kvaløy, Ola & Schöttner, Anja, 2015. "Incentives to motivate," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 26-42.
    10. Bradler, Christiane & Neckermann, Susanne, 2016. "The magic of the personal touch: Field experimental evidence on money appreciation as gifts," ZEW Discussion Papers 16-043, ZEW - Leibniz Centre for European Economic Research.
    11. Chadi, Adrian & Homolka, Konstantin, 2022. "Little Lies and Blind Eyes – Experimental Evidence on Cheating and Task Performance in Work Groups," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 122-159.
    12. Bettinger, Eric & Ludvigsen, Sten & Rege, Mari & Solli, Ingeborg F. & Yeager, David, 2018. "Increasing perseverance in math: Evidence from a field experiment in Norway," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 1-15.
    13. Cassar, Lea & Armouti-Hansen, Jesper & Dereky, Anna & Engl, Florian, 2021. "Efficiency Wages with Motivated Agents," CEPR Discussion Papers 15723, C.E.P.R. Discussion Papers.
    14. Donze, Jocelyn & Simard-Casanova, Olivier, 2018. "Managing Employees 'Insides' to Remedy Agency Problems? A Model of Transformational Leadership," MPRA Paper 94459, University Library of Munich, Germany.
    15. Florian Englmaier & Stefan Grimm & Dominik Grothe & David Schindler & Simeon Schudy, 2021. "The Value of Leadership: Evidence from a Large-Scale Field Experiment," CESifo Working Paper Series 9273, CESifo.
    16. Sebastian Fest & Ola Kvaløy & Petra Nieken & Anja Schöttner, 2019. "Motivation and incentives in an online labor market," CESifo Working Paper Series 7526, CESifo.

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    More about this item

    Keywords

    verbal motivation; performance pay; field experiment;
    All these keywords.

    JEL classification:

    • 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
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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