ABSTRACT

Despite the prevalence of non-routine analytical team tasks in modern economies, little is known about how incentives and organizational details (e.g., leadership) influence performance in these tasks. In a series of field experiment with more than 4500 participants, we document a positive effect of bonus incentives on the probability of completion of such a task. Bonus incentives increase performance due to the reward rather than the reference point (performance threshold) they provide. The framing of bonuses (as gains or losses) plays a minor role. Incentives improve performance also in an additional sample of presumably less motivated workers. However, incentives reduce these workers’ willingness to “explore” original solutions. Improved Leadership has positive performance effects.

(with Stefan Grimm & David Schindler & Simeon Schudy)