Ambiguous incentives and the persistence of effort: Experimental evidence

Robin Hogarth () and Marie Claire Villeval

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Abstract: When the assignment of incentives is uncertain, we study how the regularity and frequency of rewards and risk attitudes influence participation and effort. We contrast three incentive schemes in a real-effort experiment in which individuals decide when to quit : a continuous incentive scheme and two intermittent ones, fixed and random. In all treatments, we introduce a regime shift by withdrawing monetary rewards after the same unknown number of periods. In such an ambiguous environment, we show that less able and more risk averse players are less persistent in effort. Intermittent incentives lead to a greater persistence of effort, while continuous incentives entail exit as soon as payment stops. Randomness increases both earlier and later exiting. This selection effect in terms of ability and risk attitudes combined with the impact of intermittent rewards on persistence lead to an increase in mean performance after the regime shift when incentives are intermittent.

Keywords: Incentives; intermittent reinforcement; randomness; effort; quitting; learning; experiment (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-exp and nep-hrm
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01098750v1
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Citations: View citations in EconPapers (11)

Published in Journal of Economic Behavior and Organization, 2014, 100, pp. 1-19. ⟨10.1016/j.jebo.2014.01.006⟩

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Journal Article: Ambiguous incentives and the persistence of effort: Experimental evidence (2014)
Working Paper: Ambiguous Incentives and the Persistence of Effort: Experimental Evidence (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01098750

DOI: 10.1016/j.jebo.2014.01.006

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