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One Size Fits All? The Interplay of Incentives, Effort Provision, and Personality

Author

Listed:
  • Bašić, Zvonimir

    (University of Glasgow)

  • Bortolotti, Stefania

    (University of Bologna)

  • Salicath, Daniel

    (NAV Norwegian Labour and Welfare Administration)

  • Schmidt, Stefan

    (Max Planck Institute for Research on Collective Goods)

  • Schneider, Sebastian O.

    (Max Planck Institute for Research on Collective Goods)

  • Sutter, Matthias

    (Max Planck Institute for Research on Collective Goods)

Abstract

Incentives are supposed to increase effort, yet individuals react differently to incentives. We examine this heterogeneity by investigating how personal characteristics, preferences, and socio-economic background relate to incentives and performance in a real effort task. We analyze the performance of 1,933 high-school students under a Fixed, Variable, or Tournament payment. Productivity and beliefs about relative performance, but hardly any personal characteristics, play a decisive role for performance when payment schemes are exogenously imposed. Only when given the choice to select the payment scheme, personality traits, economic preferences and socioeconomic background matter. Algorithmic assignment of payment schemes could improve performance, earnings, and utility, as we show.

Suggested Citation

  • Bašić, Zvonimir & Bortolotti, Stefania & Salicath, Daniel & Schmidt, Stefan & Schneider, Sebastian O. & Sutter, Matthias, 2024. "One Size Fits All? The Interplay of Incentives, Effort Provision, and Personality," IZA Discussion Papers 17287, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17287
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    More about this item

    Keywords

    effort; productivity; incentives; personality traits; preferences; socio-economic background; ability; heterogeneity; sorting; algorithm; lab-in-the-field experiment;
    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
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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