AEA RCT Registry

Trial Information

General Information

Title

Do financial incentives send non-financial signals?

RCT ID

AEARCTR-0008152

Initial registration date

August 27, 2021

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

August 30, 2021, 5:17 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country

Germany

Region

Country

Spain

Region

Country

Ireland

Region

Primary Investigator

Name

Jesper Akesson

Affiliation

The Behaviouralist

Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status

Completed

Start date

2020-12-04

End date

2020-12-16

Keywords

Behavior, Firms & Productivity

Additional Keywords

Incentives

JEL code(s)

C7, C9, D9

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

Sponsors & Partners

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

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.

Supporting Documents and Materials

IRB

Institutional Review Boards (IRBs)

IRB Name

IRB Approval Date

IRB Approval Number

Analysis Plan

Do financial incentives send non-financial signals?

Pre-Trial

General Information

Locations

Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Registration Citation

Interventions

Primary Outcomes

Secondary Outcomes

Experimental Design

Experiment Characteristics

Institutional Review Boards (IRBs)

Post-Trial

Study Withdrawal

Intervention

Data Publication

Program Files

Relevant Paper(s)

Reports & Other Materials