EconPapers    
Economics at your fingertips  
 

Give Me a Challenge or Give Me a Raise

Aleksandr Alekseev ()

Working Papers from Chapman University, Economic Science Institute

Abstract: I study the effect of task difficulty on workers' effort and compare it to the effect of monetary rewards in an incentivized lab experiment. I find that task difficulty has an inverse-U effect on effort, and that this effect is quantitatively large when compared to the effect of conditional monetary rewards. Difficulty acts as a mediator of monetary rewards: conditional rewards are most effective at the intermediate or high levels of difficulty. I show that the inverse-U pattern of effort response to difficulty is not consistent with the Expected Utility model but is consistent with the Rank-Dependent Utility model that allows for non-linear probability weighting. I structurally estimate the model and find that it successfully captures the treatment effects observed in the data. I discuss the implications of my findings for the design of optimal incentive schemes for workers and modeling effort.

Keywords: Incentives; Task difficulty; Monetary rewards; Effort Provision; Risk preferences; Probability weighting (search for similar items in EconPapers)
JEL-codes: C91 D91 D81 J20 J33 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-exp and nep-upt
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://digitalcommons.chapman.edu/esi_working_papers/280/

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:19-21

Access Statistics for this paper

More papers in Working Papers from Chapman University, Economic Science Institute Contact information at EDIRC.
Bibliographic data for series maintained by Megan Luetje ().

 
Page updated 2021-06-12
Handle: RePEc:chu:wpaper:19-21