Incentive schemes and peer effects on risk behaviour: an experiment
Francesca Gioia ()
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Francesca Gioia: University of Edinburgh
Theory and Decision, 2019, vol. 87, issue 4, 473-495
Abstract This paper studies whether incentivizing performance with competition and cooperation-based incentive schemes, rather than individual compensation, affects peer effects on subsequent risk behaviour. We run a laboratory experiment in which we introduce three different compensation schemes—piece rate, the equal-split-sharing-rule and a tournament—associated with a real effort task and we measure risk behaviour both before and after the effort task. We find that competition more than halves peer influence on risk behaviour compared with piece-rate compensation and in some specifications produces negative peer effects. Competition also significantly reduces an individual’s feeling of attachment to their peers and self-reported peer influence.
Keywords: Risk behaviour; Incentive schemes; Peer effects; Competition; Equal-split-sharing-rule (search for similar items in EconPapers)
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