Lottery-Based Reward Schemes Improve Worker Motivation and Productivity

60 Pages Posted: 10 Mar 2020

See all articles by Adrian Camilleri

Adrian Camilleri

University of Technology Sydney

Katarína Danková

University of East Anglia (UEA)

Nano Ortiz Gomez

Middlesex University

Ananta Neelim

RMIT University - School of Economics, Finance and Marketing

Date Written: February 18, 2020

Abstract

The purpose of this research was to investigate the effectiveness of a probabilistic reward scheme to motivate workers and increase their performance. Across three experiments comprising both physical and cognitive tasks, we compared two novel probabilistic with two traditional non-probabilistic reward schemes. In our flagship “single lottery” probabilistic scheme, worker performance was associated with the accumulation of lottery tickets in the worker’s own personal lottery with a moderate jackpot on offer. It was possible for the worker to accumulate all tickets and thus guarantee the jackpot. We found that the single lottery scheme increased motivation and performance relative to a non-probabilistic piece-rate scheme with the same expected value. We argue that the probabilistic scheme benefited from greater excitement, over-optimism, and the goal gradient effect. In light of perceptions of (un)fairness associated with probabilistic reward schemes, we discuss what labor contexts are appropriate for the introduction of a probabilistic reward scheme.

Keywords: Experiment, Motivation, Performance, Reward, Incentives, Fairness, Justice

JEL Classification: M52

Suggested Citation

Camilleri, Adrian and Danková, Katarína and Ortiz Gomez, Jose Maria and Neelim, Ananta, Lottery-Based Reward Schemes Improve Worker Motivation and Productivity (February 18, 2020). Available at SSRN: https://ssrn.com/abstract=3539871 or http://dx.doi.org/10.2139/ssrn.3539871

Adrian Camilleri (Contact Author)

University of Technology Sydney ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007
Australia

Katarína Danková

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Jose Maria Ortiz Gomez

Middlesex University ( email )

The Burroughs
London, NW4 4BT
United Kingdom

Ananta Neelim

RMIT University - School of Economics, Finance and Marketing ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia

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