2019/06. Incentives to Persevere
Elif Incekara-Hafalir, University of Technology Sydney; Grace HY Lee, Monash University (Malaysia); Audrey KL Siah, Monash University (Malaysia) and Erte Xiao, Monash University
Date of publication: May 2019
Working paper number: 06
Achieving success often requires persistent efforts. We study the effectiveness of two reward mechanisms, all-or-nothing and piece-rate, to incentivize full completion of repeated tasks over a period of time. Data from two randomized controlled trials show that the full completion rate under the all-or-nothing mechanism does not differ from that under the regular piece-rate mechanism. However, when given the choice between the all-or-nothing and piece-rate mechanisms in a third (self-select) treatment, a significant number of participants chose the all-or-nothing mechanism despite the risk. The overall full completion rate is significantly higher in the self-select treatment than the piece-rate treatment. Our results highlight the importance of choice in incentivising persistent efforts.