Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/305729 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17287
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
effort
productivity
incentives
personality traits
preferences
socio-economic background
ability
heterogeneity
sorting
algorithm
lab-in-the-field experiment
JEL: 
C93
D91
J24
J41
Document Type: 
Working Paper

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