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Incentive schemes and peer effects on risk behaviour: an experiment

Francesca Gioia ()

Theory and Decision, 2019, vol. 87, issue 4, No 3, 473-495

Abstract: 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)
Date: 2019
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DOI: 10.1007/s11238-019-09717-4

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