Do financial incentives send non-financial signals?

Last registered on August 30, 2021

Pre-Trial

Trial Information

General Information

Title
Do financial incentives send non-financial signals?
RCT ID
AEARCTR-0008152
Initial registration date
August 27, 2021
Last updated
August 30, 2021, 5:17 PM EDT

Locations

Region
Region
Region

Primary Investigator

Affiliation
The Behaviouralist

Other Primary Investigator(s)

Additional Trial Information

Status
Completed
Start date
2020-12-04
End date
2020-12-16
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In this online experiment, we study the extent to which financial incentives change behaviour by 1) altering the pecuniary costs and benefits associated with actions or by 2) conveying non-price information. We construct an economic game (n = 3,657) in which some participants (‘employers’) set the salary (‘incentive’) that other participants (‘employees’) earn when completing an effort task on behalf of a charity (‘client’). Employers must choose from one of two possible incentive schemes; however, some employers are then randomly chosen to have their choices reversed. The structure of the game allows us to estimate whether the employers’ choice of incentives affects the behaviour of employees, holding constant the financial incentives that employees face.
External Link(s)

Registration Citation

Citation
Akesson, Jesper. 2021. "Do financial incentives send non-financial signals?." AEA RCT Registry. August 30. https://doi.org/10.1257/rct.8152-1.0
Experimental Details

Interventions

Intervention(s)
Study participants are first randomly assigned the role of ‘employer’ or ‘employee’. Those assigned the role of employers must choose between two incentive schemes that the employee will face when completing a task on behalf of a client (a charity).

If the employer chooses the first option (the '5-minute option'), she receives a large personal financial payoff, and the employees are given ten minutes to complete tasks. However, the employees are only remunerated for tasks completed during the first five minutes. If the employer chooses the second option (the '10-minute option'), she receives a smaller personal financial payoff. However, the employee is then remunerated for up to ten minutes of work, as opposed to just five minutes. Thus, the employer must choose between increasing her own financial payoff or instead offering the employee a more ‘generous’ incentive scheme.

For those assigned the role of employees, we randomly allocate them to employers, and randomly reverse the decisions of 25 percent of employers. The clients always earn the same amount per task completed by the employees (irrespective of the choice of the employer), and the employees know what the employers’ options and choices are.
Intervention Start Date
2020-12-04
Intervention End Date
2020-12-16

Primary Outcomes

Primary Outcomes (end points)
Our main outcome of interest is the effort that employees exert. As we cannot directly measure employee effort, we use the following proxy variables: 1) the number of strings that employees classify correctly, 2) the amount of time that employees spend working on the task, 3) whether employees spend more than five minutes working on the task, and 4) the number of strings that the employees think they classified correctly.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Our secondary outcomes of interest are employee perceptions regarding whether the welfare of the client is their responsibility and the selfishness of their employer. More specifically, we ask whether they agree with the following statements: “The employer made a selfish decision” and “It is my responsibility to ensure that the client receives an adequate payoff”.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Study participants are first randomly assigned the role of ‘employer’ or ‘employee’. Those assigned the role of employers must choose between two incentive schemes that the employee will face when completing a task on behalf of a client (a charity).

If the employer chooses the first option (the '5-minute option'), she receives a large personal financial payoff, and the employees are given ten minutes to complete tasks. However, the employees are only remunerated for tasks completed during the first five minutes. If the employer chooses the second option (the '10-minute option'), she receives a smaller personal financial payoff. However, the employee is then remunerated for up to ten minutes of work, as opposed to just five minutes. Thus, the employer must choose between increasing her own financial payoff or instead offering the employee a more ‘generous’ incentive scheme.

For those assigned the role of employees, we randomly allocate them to employers, and randomly reverse the decisions of 25 percent of employers. The clients always earn the same amount per task completed by the employees (irrespective of the choice of the employer), and the employees know what the employers’ options and choices are.
Experimental Design Details
Randomization Method
Randomization done using Qualtrics built-in program.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
n/a
Sample size: planned number of observations
3657 individuals
Sample size (or number of clusters) by treatment arms
1615 'employers' and 2042 'employees' (of which 551 are assigned to employers who choose the 5-minute option and have their decisions reversed, 479 assigned to employers who choose the 5-minute option and do not have their decisions reversed, 512 assigned to employers who choose the 10-minute option and have their decisions reversed, and 500 assigned to employers who choose the 10-minute option and do not have their decisions reversed).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Power calculations conducted before the experiment suggested that we would need a sample of around 356 individuals per treatment condition to detect an effect size of 10 percentage points (with a baseline of 60% prevalence in the control condition) with 80% power. We have around 500 employees per condition, meaning that we have sufficient a priori statistical power to detect effects of that magnitude.
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
December 16, 2020, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
December 16, 2020, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
n/a
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
3657 individuals
Final Sample Size (or Number of Clusters) by Treatment Arms
1615 'employers' and 2042 'employees' (of which 551 are assigned to employers who choose the 5-minute option and have their decisions reversed, 479 assigned to employers who choose the 5-minute option and do not have their decisions reversed, 512 assigned to employers who choose the 10-minute option and have their decisions reversed, and 500 assigned to employers who choose the 10-minute option and do not have their decisions reversed).
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials