Discussion Paper No. 71
November 4, 2021
The Effect of Incentives in Non-Routine Analytical Team Tasks - Evidence From a Field Experiment
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Abstract:
Despite the prevalence of non-routine analytical team tasks in modern economies, little is known about how incentives influence performance in these tasks. In a field experiment with more than 3000 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.
Keywords:
team work; bonus; incentives; loss; gain; non-routine; exploration;
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Discussion Paper No. 60
Does a Short-Term Increase in Incentives Boost Performance?
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Abstract:
If agents are exposed to continual competitive pressure, how does a short-term variation of the severity of the competition affect agents' performance? In a real-effort laboratory experiment, we study a one-time increase in incentives in a sequence of equally incentivized contests. Our results suggest that a short-term increase in incentives induces a behavioral response but does not boost total performance.
Keywords:
contest; tournament; real-effort; experiment; contract theory; forward-looking;
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Discussion Paper No. 32
November 3, 2021
Deterministic Mechanisms, the Revelation Principle, and Ex-Post Constraints
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Abstract:
This note establishes a revelation principle in terms of payoff for deterministic mech- anisms under ex-post constraints: the maximal payoff implementable by a feasible deterministic mechanism can also be implemented by a feasible deterministic direct mechanism.
Keywords:
mechanism design; revelation principle; ex-post contraints;
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Discussion Paper No. 27
Ex-Post Optimal Knapsack Procurement
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Abstract:
We consider a budget-constrained mechanism designer who selects an optimal set of projects to maximize her utility. Projects may differ in their value for the designer, and their cost is private information. In this allocation problem, the quantity of procured projects is endogenously determined by the mechanism. The designer faces ex-post constraints: The participation and budget constraints must hold for each possible outcome, while the mechanism must be strategy proof. We identify settings in which the class of optimal mechanisms has a deferred acceptance auction representation which allows an implementation with a descending-clock auction. Only in the case of symmetric projects do price clocks descend synchronously such that the cheapest projects are implemented. The case in which values or costs are asymmetrically distributed features a novel tradeoff between quantity and quality. The reason is that guaranteeing allocation to the most favorable projects under strategy proofness comes at the cost of a diminished expected number of conducted projects.
Keywords:
mechanism design; knapsack; budget; procurement; auction; deferred acceptance auctions;
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Discussion Paper No. 26
Can a Bonus Overcome Moral Hazard? An Experiment on Voluntary Payments, Competition, and Reputation in Markets for Expert Services
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Abstract:
Interactions between players with private information and opposed interests are often prone to bad advice and inefficient outcomes, e.g. markets for financial or health care services. In a deception game we investigate experimentally which factors could improve advice quality. Besides advisor competition and identifiability we add the possibility for clients to make a voluntary payment, a bonus, after observing advice quality. We observe a positive effect on the rate of truthful advice when the bonus creates multiple opportunities to reciprocate, that is, when the bonus is combined with identifiability (leading to several client-advisor interactions over the course of the game) or competition (allowing one advisor to have several clients who may reciprocate within one period).
Keywords:
asymmetric information; principal-agent; expert services; deception game; sender-receiver game; reciprocity; reputation; experiments; voluntary payment; competition;
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Discussion Paper No. 20
The Employment Effects of Countercyclical Infrastructure Investments
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Abstract:
We estimate the causal impact of a sizable German infrastructure investment program on employment at the county level. The program focused on improving the energy efficiency of school buildings, making it possible to use the number of schools as an instrument for investments. We find that the program was effective, creating one job for one year for each €25’000 of investments. The employment gains reached their peak after nine months and dropped to zero quickly after the program’s completion. The reductions in unemployment amounted to two-thirds of the job creation, and employment grew predominately in the construction and non-tradable industries.
Keywords:
infrastructure investments; job creation; employment dynamics; countercyclical fiscal policy;
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