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Incentives to Persevere

Author

Listed:
  • Elif Incekara-Hafalir

    (Economics Discipline Group, UTS Business School, University of Technology Sydney, Ultimo New South Wales 2045, Australia)

  • Grace H. Y. Lee

    (Department of Economics, Monash University Malaysia, Subang Jaya, Selangor 47500, Malaysia)

  • Audrey K. L. Siah

    (Department of Economics, Monash University Malaysia, Subang Jaya, Selangor 47500, Malaysia)

  • Erte Xiao

    (Department of Economics, Monash University, Clayton, Victoria 3800, Australia)

Abstract

Achieving success often requires persistent effort. We study the effectiveness of two reward mechanisms, all-or-nothing and piece-rate, to incentivize full completion of repeated tasks over time. Our theoretical analysis shows that exogenously imposing the all-or-nothing mechanism can be ineffective due to the potential discouragement effect. In contrast, empowering individuals to choose between the two reward mechanisms can significantly improve the full completion rate. Data from a series of field experiments and follow-up replications provide robust evidence that the all-or-nothing mechanism is effective only when it is presented as an option. Our results highlight the importance of choice in incentivizing persistent effort.

Suggested Citation

  • Elif Incekara-Hafalir & Grace H. Y. Lee & Audrey K. L. Siah & Erte Xiao, 2023. "Incentives to Persevere," Management Science, INFORMS, vol. 69(9), pages 5378-5393, September.
    • Handle: RePEc:inm:ormnsc:v:69:y:2023:i:9:p:5378-5393
    DOI: 10.1287/mnsc.2022.4649
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    perseverance; incentives; self-control; field experiments;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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