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

De Quidt, Jonathan; Fallucchi, Francesco; K�lle, Felix; Nosenzo, Daniele; Quercia, Simone

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.

Citation

De Quidt, J., Fallucchi, F., Kölle, F., Nosenzo, D., & Quercia, S. (2017). Bonus versus penalty: how robust are the effects of contract framing?. Journal- Economic Science Association, 3(2), https://doi.org/10.1007/s40881-017-0039-9

• Journal Article Type: Article
• Acceptance Date: Aug 27, 2017
• Online Publication Date: Sep 23, 2017
• Publication Date: Dec 30, 2017
• Deposit Date: Sep 4, 2017
• Publicly Available Date: Sep 23, 2017
• Journal: Journal of the Economic Science Association
• Electronic ISSN: 2199-6776
• Peer Reviewed: Peer Reviewed
• Volume: 3
• Issue: 2
• DOI: https://doi.org/10.1007/s40881-017-0039-9
• Keywords: contract framing; bonus; penalty; fine; loss aversion
• Public URL: https://nottingham-repository.worktribe.com/output/901963
• Publisher URL: https://link.springer.com/article/10.1007/s40881-017-0039-9
• Contract Date: Sep 4, 2017