EconPapers    
Economics at your fingertips  
 

Large stakes and big mistakes

Dan Ariely, Uri Gneezy, George Loewenstein () and Nina Mazar

No 05-11, Working Papers from Federal Reserve Bank of Boston

Abstract: Most upper-management and sales force personnel, as well as workers in many other jobs, are paid based on performance, which is widely perceived as motivating effort and enhancing productivity relative to non-contingent pay schemes. However, psychological research suggests that excessive rewards can in some cases produce supra-optimal motivation, resulting in a decline in performance. To test whether very high monetary rewards can decrease performance, we conducted a set of experiments at MIT, the University of Chicago, and rural India. Subjects in our experiment worked on different tasks and received performance-contingent payments that varied in amount from small to large relative to their typical levels of pay. With some important exceptions, we observed that high reward levels can have detrimental effects on performance.

Keywords: Microeconomics (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-cwa, nep-exp and nep-lab
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11) Track citations by RSS feed

Downloads: (external link)
http://www.bostonfed.org/economic/wp/wp2005/wp0511.htm (text/html)
http://www.bostonfed.org/economic/wp/wp2005/wp0511.pdf (application/pdf)

Related works:
Journal Article: Large Stakes and Big Mistakes (2009) Downloads
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:fip:fedbwp:05-11

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Boston Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Spozio ().

 
Page updated 2019-10-08
Handle: RePEc:fip:fedbwp:05-11