Review of Economic Studies Vol. 76 No. 2 2009
Large Stakes and Big Mistakes
Abstract
Workers in a wide variety of jobs are paid based on performance, which is commonly seen as enhancing effort and productivity relative to non-contingent pay schemes. However, psychological research suggests that excessive rewards can, in some cases, result in a decline in performance. To test whether very high monetary rewards can decrease performance, we conducted a set of experiments in the U.S. and in India in which subjects worked on different tasks and received performance-contingent payments that varied in amount from small to very large relative to their typical levels of pay. With some important exceptions, very high reward levels had a detrimental effect on performance.
- DOI
- 10.1111/j.1467-937x.2009.00534.x
- Volume
- 76
- Issue
- 2
- Pages
- 451-469
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref