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Incentivizing Creativity: A Large-Scale Experiment with Performance Bonuses and Gifts

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  • Christiane Bradler
  • Susanne Neckermann
  • Arne Jonas Warnke

Abstract

This paper reports the results from a large-scale laboratory experiment that compared the impacts of a performance bonus and a wage gift on output from a creative task and a simple task. We find that the performance bonus substantially increases output in both the creative task and the simple task. By comparison, the wage gift increases output only in the simple task. Additional experimental treatments suggest that reciprocity in the creative task is inhibited because agents are uncertain about how their efforts affect the payments that accrue to the principal as a result of the agents’ work.

Suggested Citation

  • Christiane Bradler & Susanne Neckermann & Arne Jonas Warnke, 2019. "Incentivizing Creativity: A Large-Scale Experiment with Performance Bonuses and Gifts," Journal of Labor Economics, University of Chicago Press, vol. 37(3), pages 793-851.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/702649
    DOI: 10.1086/702649
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    Cited by:

    1. Petr Cala & Tomas Havranek & Zuzana Irsova & Jindrich Matousek & Jiri Novak, 2022. "Financial Incentives and Performance: A Meta-Analysis of Economics Evidence," Working Papers IES 2022/27, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2022.
    2. Clemens, Marco & Sauermann, Jan, 2024. "Making the Right Call: The Heterogeneous Effects of Individual Performance Pay on Productivity," IZA Discussion Papers 17119, Institute of Labor Economics (IZA).
    3. Florian Englmaier & Stefan Grimm & Dominik Grothe & David Schindler & Simeon Schudy, 2024. "The Effect of Incentives in Nonroutine Analytical Team Tasks," Journal of Political Economy, University of Chicago Press, vol. 132(8), pages 2695-2747.
    4. Florian Englmaier & Stefan Grimm & Dominik Grothe & David Schindler & Simeon Schudy, 2021. "The Efficacy of Tournaments for Non-Routine Team Tasks," CESifo Working Paper Series 9189, CESifo.
    5. Chung-Chang Lee & Wen-Chih Yeh & Zheng Yu & Yuan-Chen Luo, 2023. "Knowledge sharing and innovation performance: a case study on the impact of organizational culture, structural capital, human resource management practices, and relational capital of real estate agent," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-16, December.
    6. Iryna Sikora, 2019. "Creative Production and Exchange of Ideas," Journal of Economics and Behavioral Studies, AMH International, vol. 11(5), pages 20-44.
    7. Sona Badalyan & Darya Korlyakova & Rastislav Rehak, 2023. "Disclosure Discrimination: An Experiment Focusing on Communication in the Hiring Process," CERGE-EI Working Papers wp743, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    8. Grözinger, Nicola & Irlenbusch, Bernd & Laske, Katharina & Schröder, Marina, 2020. "Innovation and communication media in virtual teams – An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 201-218.
    9. Adrian Chadi & Mario Mechtel & Vanessa Mertins, 2022. "Smartphone bans and workplace performance," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 287-317, February.
    10. Marco Clemens & Jan Sauermann, 2024. "Making the Right Call: The Heterogeneous Effects of Individual Performance Pay on Productivity," IAAEU Discussion Papers 202405, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    11. van Lent, Max, 2024. "Peer Creativity and Academic Achievement," IZA Discussion Papers 16847, Institute of Labor Economics (IZA).

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