The effect of monetary incentives on cognitive effort, emotions and test-solving performance

Juan F. Castro , Gustavo Yamada , Hans Contreras, Freddy Linares, Herwig Watson

Research output: Working paper

Abstract

The relation between monetary incentives, cognitive effort and task performance has been extensively studied. There is, however, scant experimental evidence about the concurrent effect of incentives on cognitive effort and emotions, and its implications for task performance. It is well documented that high-stakes tests correlate with students’ anxiety and performance, but the available evidence is not causal. In this paper we estimate the effect of providing a monetary prize on the cognitive effort, emotions and efficacy exhibited by a group of university students when solving a set of four mathematics and logical reasoning questions. The prize was conditional on answering all questions correctly and was randomly assigned within a group of 126 participants.
We find that the incentive produced more cognitive effort but this did not translate into increased test-solving efficacy. We provide evidence suggesting that the absence of increased efficacy despite the greater input of cognitive effort can be linked to the participants’ emotional response to the prize.
Original languageEnglish
Number of pages37
StatePublished - Dec 2018

Publication series

NameWorking paper
PublisherPeruvian Economic Association
No.131

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