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Incentivizing Quantity and Quality of Output: An Experimental Investigation of the Quantity-Quality Trade-off

Listed author(s):
  • Jared Rubin

    (Argyros School of Business and Economics, Chapman University)

  • Anya Samek

    (Center for Economic and Social Research, University of Southern California)

  • Roman M. Sheremeta

    ()

    (Weatherhead School of Management, Case Western Reserve University)

Firms face an optimization problem that requires a maximal quantity output given a quality constraint. How firms should incentivize quantity and quality to meet these dual goals remains an open question, potentially due to limitations of field data. We provide a theoretical model and conduct an experiment in which participants are paid for both quantity and quality of a real effort task. Consistent with the theoretical predictions, higher quality incentives encourage participants to shift their attention from quantity to quality, and higher quality incentives reduce inefficient decision-making. We also observe behavioral components in responsiveness to the quality incentive.

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File URL: http://www.chapman.edu/research-and-institutions/economic-science-institute/_files/WorkingPapers/rubin-samek-sheremeta-quantity-quality.pdf
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Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 16-01.

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Date of creation: 2016
Handle: RePEc:chu:wpaper:16-01
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