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Financial incentives and academic performance: An experimental study

Author

Listed:
  • Noemí Herranz-Zarzoso

    (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain)

  • Gerardo Sabater-Grande

    (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain)

Abstract

This paper analyzes the effect of financial incentives on academic performance by means of a randomized field experiment. Using two alternative payment mechanisms we implement two experimental treatments designed to motivate students depending on their absolute or relative academic performance. Subjects, recruited among students from Microeconomics, were split in two groups depending on whether they had a failed background in the aforementioned subject (returning students) or not (new students). New students were informed that they would receive a reward depending on their bet (the grade they thought would achieve) and the real grade obtained. In the case of the returning students, the reward was calculated taking into account the bet, the obtained real grade and their improvement with respect to previous semesters. In the first treatment students were rewarded according to a piece rate system whereas in the second one we established two rankings (one for new students and another one for returning students) classifying them depending on their academic performance. In both treatments we find that the implemented incentives are effective to increase the average of grades for both types of students (new and returning), but the piece rate mechanism is more powerful to motivate a higher number of students.

Suggested Citation

  • Noemí Herranz-Zarzoso & Gerardo Sabater-Grande, 2016. "Financial incentives and academic performance: An experimental study," Working Papers 2016/18, Economics Department, Universitat Jaume I, Castellón (Spain).
    • Handle: RePEc:jau:wpaper:2016/18
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    References listed on IDEAS

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    More about this item

    Keywords

    Betting for grades; incentives; academic performance; piece rate mechanism; rank-order tournament;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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