Abstract for: Incentives and Correlational Thinking: An Experiment with Piece-Rate Payments

In the published research regarding the SF failure, the effect of motivation has been given very little attention. As a whole, we additionally see literature point to monetary piece-rate incentives directly tethering quality of work improves performance at a factor greater than that of flat-rate incentives. Furthermore, literature suggests that loss framing can additionally enhance motivation, framing performance as a penalty rather than a bonus activates notions of loss aversion and the endowment effect. In an ongoing experiment we will be able to distinguish the effect of a piece-rate monetary incentive framed as a bonus or a penalty, from the incentives using a flat rate in SF tasks. Furthermore, we expect to determine the effect of these treatments on the use of the correlation heuristic. Preliminary results suggest that individuals in conditions of loss-framed piece-rate incentives perform better in the contexts of stock-flow problem solving.