Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322121 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 2025:5
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract: 
We conduct a field experiment studying how financial incentives for achieving specific course grades affect university students, whether effects vary by ability, and whether allowing students to choose their goals improves outcomes. We find that incentives negatively affect performance, particularly among low-ability students assigned high goals. Survey data suggest this negative impact arises from a mismatch between assigned goals and students' abilities, distorting their reference points and expectations. Allowing students to choose their goals partially mitigates this effect but does not eliminate it. Our results caution against incentives in education and highlight a novel mechanism through which incentives can backfire.
Subjects: 
Incentives
Performance goals
Academic performance
Field experiment
JEL: 
C93
D90
I22
I23
Document Type: 
Working Paper

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