Journal article

Monetary and Non-Monetary Incentives in Real-effort Tournaments

N Erkal, L Gangadharan, BH Koh

European Economic Review | Elsevier | Published : 2018


Results from laboratory experiments using real-effort tasks provide mixed evidence on the relationship between monetary incentives and effort provision. To examine this issue, we design three experiments where subjects participate in two-player real-effort tournaments with two prizes. Experiment 1 shows that subjects exert high effort even if there are no monetary incentives, suggesting that non-monetary incentives are contributing to their effort choices. Moreover, increasing monetary incentives does not result in higher effort provision. Experiment 2 shows that the impact of non-monetary incentives can be reduced by providing subjects with the option of leaving the laboratory early, using ..

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University of Melbourne Researchers


Awarded by Australian Research Council

Funding Acknowledgements

This work was supported by the Australian Research Council (DP1094676). Koh acknowledges support from the Melbourne International Research Scholarship. The authors would like to thank Tim Cason, Cary Deck, Nick Feltovich, Simon Gachter, Phil Grossman, Lingbo Huang, Guy Mayraz, Daniele Nosenzo, Jorg Oechssler, Roman Sheremeta, Bob Slonim, Chris Starmer, Marie Claire Villeval, Tom Wilkening, the Associate Editor, three anonymous reviewers, participants at the 10th Annual Australia New Zealand Workshop on Experimental Economics (ANZWEE), the 2016 Economics and Biology of Contests Conference (EBCC), the 2016 North American Meetings of the Economic Science Association (ESA), the 2017 CBESS-CeDExCREED (CCC) Meeting, and seminar participants at the University of Melbourne for their comments and feedback.