Bonus versus penalty: How robust are the effects of contract framing?

Jonathan De Quidt; Francesco Fallucchi; Felix Kölle; Daniele Nosenzo; Simone Quercia

doi:10.1007/s40881-017-0039-9

Bonus versus penalty: How robust are the effects of contract framing?

Jonathan De Quidt, Francesco Fallucchi, Felix Kölle, Daniele Nosenzo, Simone Quercia

Research output: Contribution to journal › Article › peer-review

Abstract

We study the relative effectiveness of contracts that are framed either in terms of bonuses or penalties. In one set of treatments, subjects know at the time of effort provision whether they have achieved the bonus/avoided the penalty. In another set of treatments, subjects only learn the success of their performance at the end of the task. We fail to observe a contract framing effect in either condition: effort provision is statistically indistinguishable under bonus and penalty contracts.

Original language	English
Pages (from-to)	174-182
Number of pages	0
Journal	Journal of the Economic Science Association
Volume	3
DOIs	https://doi.org/10.1007/s40881-017-0039-9
Publication status	Published - 1 Jan 2017

Keywords

Llss aversion
bonus
contract framing
fine
penalty

Access to Document

10.1007/s40881-017-0039-9Licence: Other

Cite this

@article{8c65b1dd76374aab92f95cbfb38b23c4,

title = "Bonus versus penalty: How robust are the effects of contract framing?",

abstract = "We study the relative effectiveness of contracts that are framed either in terms of bonuses or penalties. In one set of treatments, subjects know at the time of effort provision whether they have achieved the bonus/avoided the penalty. In another set of treatments, subjects only learn the success of their performance at the end of the task. We fail to observe a contract framing effect in either condition: effort provision is statistically indistinguishable under bonus and penalty contracts.",

keywords = "Llss aversion, bonus, contract framing, fine, penalty",

author = "{De Quidt}, Jonathan and Francesco Fallucchi and Felix K{\"o}lle and Daniele Nosenzo and Simone Quercia",

year = "2017",

month = jan,

day = "1",

doi = "10.1007/s40881-017-0039-9",

language = "English",

volume = "3",

pages = "174--182",

journal = "Journal of the Economic Science Association",