Abstract
We tested the effectiveness of performance-based incentive structures using three incentive structures — commission base, best only and flat fee — and two levels of context — no context and house-selling — in an experiment in which participants made decisions in a variant of the secretary problem. Key measures of performance were the amount of search and the rounds in which the very best (optimal) offer was chosen. We found that having a commission-based proportional incentive did not produce better performance than having a flat payment for any of the performance measures considered. However, another performance-based incentive — the best only — increased the length of their searches and led to more optimal offers. These results applied both when there was no context and when the context was selling a house.
| Original language | English |
|---|---|
| Pages (from-to) | 82-92 |
| Number of pages | 11 |
| Journal | Judgment and Decision Making |
| Volume | 15 |
| Issue number | 1 |
| Publication status | Published - Jan 2020 |
Bibliographical note
Copyright © 2020. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.Keywords
- Context
- Incentive
- Secretary problem
- Sequential decision-making