Nudging Backward Induction
William Neilson (),
Michael Price () and
Mikhael Shor ()
No 2016-31, Working papers from University of Connecticut, Department of Economics
A growing literature shows that interim incentives can help people achieve favorable long-term outcomes. We design a laboratory experiment to explore how interim incentives impact learning backward induction using a race game: Subjects play a simple game against a computer in which winning requires a sequence of correct moves. Our data highlight a perverse effect of incentives. Interim rewards inserted along the optimal path—nudges—help subjects learn patterns but crowd-out the skills required to solve a related game. Interim payments off the optimal path—teasers —can either help or hurt learning. JEL Classification: C91, D03, D60 Key words:
Pages: 42 pages
New Economics Papers: this item is included in nep-cbe and nep-exp
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