Performance Under Pressure: How Compensation Schemes Interact with Task Type in Incentivizing Performance
*Names in bold indicate Presenter
Previous literature has tested the effects of high-stakes pay and time pressure on creative versus non-creative tasks. However, few studies have drawn a distinction between multiple types of cognitively demanding tasks, such as problem-solving and pure creativity (convergent and divergent thinking) that are treated as different ways of thinking within the psychology literature. Our work is the first to use competition as a form of pressure in this context and the first to focus on gender differences in these effects. While the productivity effects of competition have been extensively studied within economics, the literature has focused largely on differences in performance across participants, and not by task type. Our study aims to bridge these two lines of research which have mostly developed separately in the literature.
We find that all incentivizing payment schemes improve productivity relative to a neutral flat rate payment scheme for routine tasks. However, when performing cognitively challenging tasks - both purely creative and problem solving tasks - incentive schemes have task-specific results. For both of these tasks, we find that participant performance is decreased by high stakes pay. Competition, on the other hand, has the largest boost in productivity for both types of cognitively challenging tasks. Further sessions of our experiment are planned, which will allow for precise estimates of differences by gender.