Incentives to Persevere

33 Pages Posted: 6 May 2022

See all articles by Elif Incekara-Hafalir

Elif Incekara-Hafalir

University of Technology Sydney

Grace Lee

Monash University, Department of Economics

Audrey Siah

Monash University - Monash University Malaysia

Erte Xiao

Monash University

Date Written: May 4, 2022

Abstract

Achieving success often requires persistent effort. We study the effectiveness of two reward mechanisms, all-or-nothing and piece-rate, to incentivize full completion of repeated tasks over time. Our theoretical analysis shows that exogenously imposing the all-or-nothing mechanism can be ineffective due to the potential discouragement effect. In contrast, empowering individuals to choose between the two reward mechanisms can significantly improve the full completion rate. Data from a series of field experiments and follow up replications provide robust evidence that the all-or-nothing mechanism is effective only when it is presented as an option. Our results highlight the importance of choice in incentivizing persistent effort.

Keywords: perseverance; incentives; self-control; field experiments

JEL Classification: C93, D91, D82, I20

Suggested Citation

Incekara-Hafalir, Elif and Lee, Grace and Siah, Audrey and Xiao, Erte, Incentives to Persevere (May 4, 2022). Available at SSRN: https://ssrn.com/abstract=4099896 or http://dx.doi.org/10.2139/ssrn.4099896

Elif Incekara-Hafalir

University of Technology Sydney ( email )

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

HOME PAGE: http://https://sites.google.com/site/incekara/

Grace Lee

Monash University, Department of Economics ( email )

Jalan Lagoon Selatan
Selangor Darul Ehsan
Selangor, 46150
Malaysia

Audrey Siah

Monash University - Monash University Malaysia ( email )

Malaysia

Erte Xiao (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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