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The Targeted Assignment of Incentive Schemes

Author

Listed:
  • Saskia Opitz

    (University of Cologne, Faculty of Management, Economics and Social Sciences, Department of Corporate Development)

  • Dirk Sliwka

    (University of Cologne, Faculty of Management, Economics and Social Sciences, Department of Corporate Development)

  • Timo Vogelsang

    (Frankfurt School of Finance & Management,Department of Accounting)

  • Tom Zimmermann

    (University of Cologne, Faculty of Management, Economics and Social Sciences, Department of Corporate Development)

Abstract

A central question in designing optimal policies concerns the assignment of individuals with different observable characteristics to different treatments. We study this question in the context of increasing workers’ performance by using targeted incentives based on measurable worker characteristics. To do so, we ran two large-scale experiments. The key results are that (i) performance can be predicted by accurately measured personality traits, (ii) a machine learning algorithm can detect such heterogeneity in worker responses to different schemes, and (iii) a targeted assignment of schemes to individual workers increases performance in a second experiment significantly above the level achieved by the single best scheme.

Suggested Citation

  • Saskia Opitz & Dirk Sliwka & Timo Vogelsang & Tom Zimmermann, 2022. "The Targeted Assignment of Incentive Schemes," ECONtribute Discussion Papers Series 187, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:187
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    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_187_2022.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Randomized Controlled Trial; Incentives; Heterogeneity; Treatment Effects; Selection; Algorithm;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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