You Will not Regret it: On the Practice of Randomized Incentives

Brice Corgnet and Roberto Hernan Gonzalez

No 2314, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: Scholars have long emphasized the importance of setting specific goals and providing clear expectations as a key driver of work performance. Yet, a casual observation of actual compensation practices suggests otherwise. Using both lab and field experiments, we show that randomization of bonus targets and piece rates can lead to higher performance than the best-available deterministic scheme. Furthermore, this effect can be sustained over time. We show that part of this effect is explained by regret motives, which lead workers to exert extra effort to avoid missing out on potential pay.

Keywords: Randomized incentives; bonuses and piece rates; regret; experiments (search for similar items in EconPapers)
JEL-codes: C91 C93 D86 D91 M52 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-hrm
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:2314

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