November 20, 2008

Effect of large monetary reward.

This is a very interesting experiment. Though, it seems counter-intuitive, it does make sense to me.

Dan Ariely
does intriguing research. His book has been on my list of must-reads for the last few months. May be I should get to it now.

He and three collaborators went to India and asked 87 people to do various tasks requiring memory, concentration, attention and creativity. They divided the 87 people and offered different monetary incentives to the three groups for the same tasks. First group got 50 cents, the second $5 and the third $50.

In real terms, these sums are much larger in India than they seem.

Their conclusions:
The people offered medium bonuses performed no better, or worse, than those offered low bonuses. But what was most interesting was that the group offered the biggest bonus did worse than the other two groups across all the tasks.

They reached similar conclusions in experiments conducted in Boston and Chicago too. For any task that requires some level of mental skill as opposed to mere mechanical effort, their research shows that large monetary reward may not have the clear motivational advantage that is usually imagined.


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