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Economic Incentives and Non-Economic Motivations in Contests

A/Prof. Mengze Shi, Rotman School of Management, University of Toronto

1st Aug 2014  02:00 pm - 04:00 pm Room 214/215, Economics and Business Building (H69)

Abstract: This paper develops a new method to investigate the interaction between economic incentives and non-economic motivations in contests. Our method separates the effect of non-economic motivations from the effects of economic motivations and risk aversion. We run a set of laboratory experiments involving contests among salespeople and use the data to estimate the levels of non-economic motivations under different treatments. Our results show that the spread of contest rewards affects both the economic and non-economic motivations of the participating agents. We also explore the effects of alternative recognition regimes on the levels of effort and non-economic motivation. We find that a regime like "President's Club", under which top performers are recognized publicly without revealing the ranking among them, performs better than other regimes. Overall, this paper demonstrates the significant impact of an agent's non-economic motivation on her effort, and underscores the importance to managers of jointly choosing incentive structures and recognition regimes.

Speaker: Mengze Shi is Associate Professor of Marketing at Rotman School of Management, University of Toronto. His research is focused on incentives and motivations, specifically how people respond to incentives and how companies should design incentive programs. He has investigated a wide range of consumer incentive programs, including loyalty rewards, sweepstakes, group buying, discounts, and direct mails, as well as incentives for sales agents such as commissions and sales contests. His work has covered such industries as airlines, wireless communications, automobile, financial services, and mailing catalogs.