Choking under time pressure: The influence of deadline-dependent bonus and malus incentive schemes on performance

Andrea Essl and Stefanie Jaussi

Journal of Economic Behavior & Organization, 2017, vol. 133, issue C, 127-137

Abstract: Many economically relevant activities are executed under notable time pressures. Incentivized deadlines are often the reason people feel pressured. In such an environment, individual preferences can predict performance. Through a laboratory experiment, we examine the predictive power of individual loss aversion on performance under deadline-dependent incentives. Participants worked on a real effort task under two payoff-equivalent contracts framed in bonus and malus terms. The results show lower performance for individuals with high loss aversion when working under a malus contract. These individuals needed more time to reply and were less able to avoid maluses than other individuals. Choking can explain this observed behavior.

Keywords: Time pressure; Deadline-dependent incentive schemes; Loss aversion; Choking under pressure; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 D03 J33 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:133:y:2017:i:c:p:127-137

DOI: 10.1016/j.jebo.2016.11.001

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