On the relative efficiency of performance pay and noncontingent incentives

Uri Gneezy, Pedro Rey-Biel

Producció científica: Article en revista indexadaArticleAvaluat per experts

25 Cites (Scopus)


We report evidence from a large field experiment that compares the effectiveness of contingent and noncontingent incentives in eliciting costly effort for a large range of payment levels. The company with which we worked sent 7,250 letters asking customers to complete a survey. Some letters promised to pay amounts ranging from $1 to $30 upon compliance (contingent incentives), whereas others already contained the money in the request envelopes (noncontingent incentives). Compared to no payment, very small contingent payments lower the response rate while small noncontingent payments raise the response rate. As expected, response rates rise with the size of the incentive offered. The response rate in the noncontingent incentives rises more rapidly for low amounts of incentive, but then flattens out and reaches lower levels than under contingent payments. We discuss how the optimal policy regarding the use of each size and type of incentives crucially depends on firms' objectives.

Idioma originalAnglès
Pàgines (de-a)62-72
Nombre de pàgines11
RevistaJournal of the European Economic Association
Estat de la publicacióPublicada - de febr. 2014
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