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Piece-Rate Incentives and Idea Generation – An Experimental Analysis

Author

Listed:
  • Katharina Laske
  • Nathalie Römer
  • Marina Schröder

Abstract

We introduce the word illustration task (WIT), a novel experimental task to quantify performance in an idea generation context. Between treatments, we vary whether or not piece-rate (PR) incentives are implemented and the degree to which these incentives are aligned with the desirable outcome. We show that PR incentives have a positive impact on the number of innovative ideas, i.e., the number of ideas that are of high quality and original. We find that unweighted PR incentives (PR provided for any idea) perform at least as well as more aligned weighted PR incentives that are additionally contingent on the quality and/or originality of ideas. Our results suggest that when it comes to fostering idea generation, it is sufficient to incentivize trying instead of incentivizing succeeding.

Suggested Citation

  • Katharina Laske & Nathalie Römer & Marina Schröder, 2024. "Piece-Rate Incentives and Idea Generation – An Experimental Analysis," CESifo Working Paper Series 11594, CESifo.
    • Handle: RePEc:ces:ceswps:_11594
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    More about this item

    Keywords

    idea generation; real-effort experiment; incentives; creativity;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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