Bad News: An Experimental Study on the Informational Effects of Rewards

Andrei Bremzeny, Elena Khokhlova, Anton Suvorov and Jeroen van de Ven ()
Additional contact information
Andrei Bremzeny: CEFIR and New Economic School
Elena Khokhlova: McKinsey&Company

No w0164, Working Papers from New Economic School (NES)

Abstract: Both psychologists and economists have argued that rewards often have hidden costs. One possible reason is that the principal may have incentives to offer higher rewards when she knows the task to be dificult. Our experiment tests if high rewards embody such bad news and if this is perceived by their recipients. Our design allows us to decompose the overall effect of rewards on effort into a direct incentive and an informational effect. The results show that most participants correctly interpret high rewards as bad news. In accordance with theory, the negative informational effect co-exists with the direct positive effect.

Keywords: reward; bonus; informational content; motivation; crowdingout; laboratory experiment (search for similar items in EconPapers)
JEL-codes: D82 D83 J33 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2011-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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https://www.nes.ru/files/Preprints-resh/WP164.pdf (application/pdf)

Related works:
Journal Article: Bad News: An Experimental Study on the Informational Effects Of Rewards (2015)
Working Paper: Bad News: An Experimental Study on the Informational Effects of Rewards (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:abo:neswpt:w0164

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