The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home. Dan Ariely

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СКАЧАТЬ can be a double-edged sword. Up to a certain point, they motivate us to learn and perform well. But beyond that point, motivational pressure can be so high that it actually distracts an individual from concentrating on and carrying out a task—an undesirable outcome for anyone.

      Of course, electric shocks are not very common incentive mechanisms in the real world, but this kind of relationship between motivation and performance might also apply to other types of motivation: whether the reward is being able to avoid an electrical shock or the financial rewards of making a large amount of money. Let’s imagine how Yerkes and Dodson’s results would look if they had used money instead of shocks (assuming that the rats actually wanted money). At small bonus levels, the rats would not care and not perform very well. At medium bonus levels, the rats would care more and perform better. But, at very high bonus levels, they would be “overmotivated.” They would find it hard to concentrate, and, as a consequence, their performance would be worse than if they were working for a smaller bonus.

      So, would we see this inverse-U relationship between motivation and performance if we did an experiment using people instead of rats and used money as the motivator? Or, thinking about it from a more pragmatic angle, would it be financially efficient to pay people very high bonuses in order to get them to perform well?

      The Bonus Bonanza

      In light of the financial crisis of 2008 and the subsequent outrage over the continuing bonuses paid to many of those deemed responsible for it, many people wonder how incentives really affect CEOs and Wall Street executives. Corporate boards generally assume that very large performance-based bonuses will motivate CEOs to invest more effort in their jobs and that the increased effort will result in higher-quality output.^* But is this really the case? Before you make up your mind, let’s see what the empirical evidence shows.

      To test the effectiveness of financial incentives as a device for enhancing performance, Nina Mazar (a professor at the University of Toronto), Uri Gneezy (a professor at the University of California at San Diego), George Loewenstein (a professor at Carnegie Mellon University), and I set up an experiment. We varied the amount of financial bonuses participants could receive if they performed well and measured the effect that the different incentive levels had on performance. In particular, we wanted to see whether offering very large bonuses would increase performance, as we usually expect, or decrease performance, analogous to Yerkes and Dodson’s experiment with rats.

      We decided to offer some participants the opportunity to earn a relatively small bonus (equivalent to about one day’s pay at their regular pay rate). Others would have a chance to earn a medium-sized bonus (equivalent to about two weeks’ pay at their regular rate). The fortunate few, and the most important group for our purposes, could earn a very large bonus, equal to about five months of their regular pay. By comparing the performances of these three groups, we hoped to get a better idea of how effective the bonuses were in improving performance.

      I know you are thinking “Where can I sign up for this experiment?” But before you make extravagant assumptions about my research budget, let me tell you that we did what many companies are doing these days—we outsourced the operation to rural India, where the average person’s monthly spending was about 500 rupees (approximately $11). This allowed us to offer bonuses that were very meaningful to our participants without raising the eyebrows and ire of the university’s accounting system.

      Once we decided where to run our experiments, we had to select the tasks themselves. We thought about using tasks that were based on pure effort, such as running, doing squats, or lifting weights, but since CEOs and other executives don’t earn their money by doing those kinds of things, we decided to focus on tasks that required creativity, concentration, memory, and problem-solving skills. After trying out a whole range of tasks on ourselves and on some students, the six tasks we selected were:

      1 Packing Quarters: In this spatial puzzle, the participant had to fit nine quarter-circle wedges into a square. Fitting eight of them is simple, but fitting all nine is nearly impossible.

      2 Simon: A bold-colored relic of the 1980s, this is (or was) a common electronic memory game requiring the participant to repeat increasingly longer sequences of lit-up colored buttons without error.

      3 Recall Last Three Numbers: Just as it sounds, this is a simple game in which we read a sequence of numbers (23, 7, 65, 4, and so on) and stopped at a random moment. Participants had to repeat the last three numbers.

      4 Labyrinth: A game in which the participant used two levers to control the angle of a playing surface covered with a maze and riddled with holes. The goal was to advance a small ball along a path and avoid the holes.

      5 Dart Ball: A game much like darts but played with tennis balls covered with the looped side of Velcro and a target covered with the hooked side so that the balls would stick to it.

      6 Roll-up: A game in which the participant moved two rods apart in order to move a small ball as high up as possible on an inclining slope.

      Having chosen the games, we packed six of each type into a large box and shipped them to India. For some mysterious reason, the people at customs in India were not too happy with the battery-powered Simon games, but after we paid a 250 percent import tax, the games were released and we were ready to start our experiment.

      We hired five graduate students in economics from Narayanan College in the southern Indian city of Madurai and asked them to go to a few of the local villages. In each of these, the students had to find a central public space, such as a small hospital or a meeting room, where they could set up shop and recruit participants for our experiment.

      One of the locations was a community center, where Ramesh, a second-year master’s student, got to work. The community center was not fully finished, with no tiles on the floors and unpainted walls, but it was fully functional and, most important, it provided protection from wind, rain, and heat.

      Ramesh positioned the six games around the room and then went outside to hail his first participant. Soon a man walked by, and Ramesh immediately tried to interest him in the experiment. “We have a few fun tasks here,” he explained to the man. “Would you be interested in participating in an experiment?” The deal sounded suspiciously like a government-sponsored activity to the passerby, so it wasn’t surprising that the fellow just shook his head and continued to walk on. But Ramesh persisted: “You can make some money in this experiment, and it’s sponsored by the university.” And so our first participant, whose name was Nitin, turned around and followed Ramesh into the community center.

      Ramesh showed Nitin all the tasks that were set up around the room. “These are the games we will play today,” he told Nitin. “They should take about an hour. Before we start, let’s find out how much you could get paid.” Ramesh then rolled a die. It landed on 4, which according to our randomization process placed Nitin in the medium-level bonus condition, which meant that the total bonus he could make from all six games was 240 rupees—or about two weeks’ worth of pay for the average person in this part of rural India.

      Next, Ramesh explained the instructions to Nitin. “For each of the six games,” he said, “we have a medium level of performance we call good and a high level of performance we call very good. For each game in which you reach the good level of performance, you will get twenty rupees, and for each game in which you reach the very good level of performance you will get forty rupees. In games in which you don’t even reach the good level, you will get nothing. This means that your payment will be somewhere between zero rupees and two hundred forty rupees, depending on your performance.”

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