Cheer Up: The Effect of Mood and Performance-Dependent Incentives on Creativity

49 Pages Posted: 8 Jul 2021

See all articles by Alisa Gabrielle Brink

Alisa Gabrielle Brink

Virginia Commonwealth University

Bernhard Erich Reichert

Virginia Commonwealth University

J. Matthew Sarji

Virginia Commonwealth University

Date Written: June 29, 2021

Abstract

Companies invest considerable resources to improve employee mood under the assumption that positive mood leads to improved creativity. However, theory suggests such investments may be in vain when the company uses performance dependent incentives. In a rebus puzzle creation task, we examine the effect of mood on creativity with compensation that is either fixed or based on the quantity or creativity of output. Positive mood leads to more highly creative output (i.e., puzzles that receive top-quartile creativity ratings) for fixed compensation, but not for quantity-dependent or creativity-dependent compensation. These results are consistent with performance-dependent compensation crowding out the effect of positive mood on creativity. Supplemental analysis indicates that this crowding out occurs over time rather than instantaneously. Further, the combination of negative mood and quantity incentives leads to the production of a larger number of puzzles that are of lowest creative quality (i.e., puzzles that receive bottom-quartile creativity ratings).

Keywords: creativity, incentives, mood, subjective performance evaluations, experimental economics

Suggested Citation

Brink, Alisa Gabrielle and Reichert, Bernhard Erich and Sarji, J. Matthew, Cheer Up: The Effect of Mood and Performance-Dependent Incentives on Creativity (June 29, 2021). Available at SSRN: https://ssrn.com/abstract=3876622 or http://dx.doi.org/10.2139/ssrn.3876622

Alisa Gabrielle Brink (Contact Author)

Virginia Commonwealth University ( email )

301 W. Main St.
PO Box 844000
Richmond, VA 23284
United States

Bernhard Erich Reichert

Virginia Commonwealth University ( email )

Richmond, VA
United States

J. Matthew Sarji

Virginia Commonwealth University ( email )

301 W Main Street
Richmond, VA 23284
United States

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