Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25605
Authors: 
Rydval, Ondřej
Year of Publication: 
2007
Series/Report no.: 
Jena economic research papers 2007,039
Abstract: 
This paper extends existing evidence on the interaction between financial incentives and cognitive capital. I focus on the impact of task-specific cognitive capital, the role of which is central to the capital-labor-production framework of Camerer and Hogarth (1999) and has long been studied in cognitive science and behavioral decision research. Using a task situated in an accounting setting, I show that both financial incentives and task-specific cognitive capital, and especially their interaction, matter for performance. In particular, the effect of task-specific cognitive capital on performance is stronger under performance-based financial incentives as compared to flat-rate incentives. The interaction effect arises because performance-based financial incentives lead to better performance only for individuals with more task-specific cognitive capital. I draw implications for compensation practices in experiments as well as work settings.
Subjects: 
Financial incentives
Cognitive abilities
Experiments
Field experiments
JEL: 
C81
C91
C93
D83
Document Type: 
Working Paper

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