Management Accounting Section Midyear Meeting

(Too) Many Choices: The (De)Motivating Effect of Reward Choice Across Tasks Demanding Differing Levels of Cognitive Resources

• In Event: Incentives and Compensation IV

Abstract

We investigate the effect of a reward choice in task settings where differing levels of cognitive resources are demanded. We use a laboratory experiment to test whether choosing from a larger set has a detrimental effect on subsequent motivation for a cognitive costly task versus a less cognitively costly task. The results show that choosing between a large set of rewards in a cognitively costly task decreases motivation significantly compared to the same choice in a less cognitively costly task. Furthermore, no significant differences in motivation emerge when individuals choose from a small set of rewards versus when they have no choice at all. By examining the effect of reward choices, we provide partial explanation for the prevalence of reward choices in compensation contracts. Moreover, this study provides insights into the conditions under which reward choice have a motivational effect.

Authors

• Liliana Dewaele, KU Leuven

• Eddy Cardinaels, Tilburg University and KU Leuven

• Alexandra Van den Abbeele, KU Leuven