Alekseev, Aleksandr (2022) Give me a challenge or give me a raise. EXPERIMENTAL ECONOMICS, 25 (1). pp. 170-202. ISSN 1386-4157, 1573-6938
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I study the effect of task difficulty on workers' effort. I find that task difficulty has an inverse-U effect on effort and that this effect is quantitatively large, especially when compared to the effect of conditional monetary rewards. Difficulty acts as a mediator of monetary rewards: conditional rewards are most effective at the intermediate or high levels of difficulty. The inverse-U pattern of effort response to difficulty is inconsistent with many popular models in the literature, including the Expected Utility models with the additively separable cost of effort. I propose an alternative mechanism for the observed behavior based on non-linear probability weighting. I structurally estimate the proposed model and find that it successfully captures the behavioral patterns observed in the data. I discuss the implications of my findings for the design of optimal incentive schemes for workers and for the models of effort provision.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | Incentives; Task difficulty; Monetary rewards; Effort provision; Probability weighting |
| Subjects: | 300 Social sciences > 330 Economics |
| Divisions: | Business, Economics and Information Systems > Institut für Volkswirtschaftslehre und Ökonometrie > Lehrstuhl für Empirische Wirtschaftsforschung - Prof. Lea Cassar |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 28 Jul 2022 07:03 |
| Last Modified: | 28 Jul 2022 07:03 |
| URI: | https://pred.uni-regensburg.de/id/eprint/45999 |
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