Social scientists often estimate models from correlational data, where the independent variable has not been exogenously manipulated; they also make implicit or explicit causal claims based on these models. When can these claims be made? We answer this question by first discussing design and estimation conditions under which model estimates can be interpreted, using the randomized experiment as the gold standard. We show how endogeneity – which includes omitted variables, omitted selection, simultaneity, common-method variance, and measurement error – renders estimates causally uninterpretable. Second, we present methods that allow researchers to test causal claims in situations where randomization is not possible or when causal interpretation could be confounded; these methods include fixed-effects panel, sample selection, instrumental variable, regression discontinuity, and difference-in-differences models. Third, we take stock of the methodological rigor with which causal claims are being made in a social sciences discipline by reviewing a representative sample of 110 articles on leadership published in the previous 10 years in top-tier journals. Our key finding is that researchers fail to address at least 66% and up to 90% of design and estimation conditions that make causal claims invalid. We conclude by offering 10 suggestions on how to improve non-experimental research.

On making causal claims : A review and recommendations

First we discuss how extrinsic incentives may come into conflict with other motivations. For example, monetary incentives from principals may change how tasks are perceived by agents, with negative effects on behavior. In other cases, incentives might have the desired effects in the short term, but they still weaken intrinsic motivations. To put it in concrete terms, an incentive for a child to learn to read might achieve that goal in the short term, but then be counterproductive as an incentive for students to enjoy reading and seek it out over their lifetimes. Next we examine the research literature on three important examples in which monetary incentives have been used in a nonemployment context to foster the desired behavior: education; increasing contributions to public goods; and helping people change their lifestyles, particularly with regard to smoking and exercise. The conclusion sums up some lessons on when extrinsic incentives are more or less likely to alter such behaviors in the desired directions.

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.25.4.191

When and Why Incentives (Don't) Work to Modify Behavior

The Theory of Incentives I: The Principal-Agent Model

A key open question for theories of reference-dependent preferences is what determines the reference point. One candidate is expectations: what people expect could affect how they feel about what actually occurs. In a real-effort experiment, we manipulate the rational expectations of subjects and check whether this manipulation influences their effort provision. We find that effort provision is significantly different between treatments in the way predicted by models of expectation-based reference-dependent preferences: if expectations are high, subjects work longer and earn more money than if expectations are low.

Reference Points and Effort Provision

Firms can seek innovative external ideas and solutions to business tasks by sponsoring co-creation activities such as crowdsourcing. To get optimal solutions from crowdsourcing contest participants, firms need to improve task design and motivate contest solvers' participation in the co-creation process. Based on the theory of extrinsic and intrinsic motivation as well as the theory of job design, we developed a research model to explain participation in crowdsourcing contests, as well as the effects of task attributes on intrinsic motivation. Subjective and objective data were collected from 283 contest solvers at two different time points. We found that intrinsic motivation was more important than extrinsic motivation in inducing participation. Contest autonomy, variety, and analyzability were positively associated with intrinsic motivation, whereas contest tacitness was negatively associated with intrinsic motivation. The findings suggest a balanced view of extrinsic and intrinsic motivation in order to encourage participation in crowdsourcing. We also suggest that crowdsourcing contest tasks should preferably be highly autonomous, explicitly specified, and less complex, as well as require a variety of skills.

Task Design, Motivation, and Participation in Crowdsourcing Contests

This article analyzes optimal job design in a repeated principal-agent relationship when there is only one contractible and imperfect performance measure for three tasks whose contribution to firm value is nonverifiable. The tasks can be assigned to either one or two agents. Assigning an additional task to an agent strengthens his relational contract. Therefore, broad task assignments are optimal when the performance measure strongly distorts incentives for the two-task job. This is more likely to be the case if these two tasks are substitutes.

https://www.econbiz.de/archiv1/2008/47455_contracts_multitasking_job.pdf

Relational Contracts, Multitasking, and Job Design

https://epub.ub.uni-muenchen.de/17651/1/451.pdf

Hidden Benefits of Reward: A Field Experiment on Motivation and Monetary Incentives

This paper studies optimal sales force compensation plans in a multiperiod moral-hazard model when the firm wants to implement high effort in every period but only obtains aggregate information on ...

Optimal Sales Force Compensation in Dynamic Settings: Commissions vs. Bonuses

This paper analyzes a procurement setting with identical firms and stochastic innovations. In contrast to the previous literature, I show that a procurer who cannot charge entry fees may prefer a fixed-prize tournament to a first-price auction. The reason is that holding an auction may leave higher rents to firms when the innovation technology is subject to large random factors.

/pdf/fixed-prize-tournaments-versus-first-price-auctions-in-57orcqh77s.pdf

Fixed-prize tournaments versus first-price auctions in innovation contests

This paper analyzes a procurement setting with two identical firms and stochastic innovations. In contrast to the previous literature, I show that a procurer who cannot charge entry fees may prefer a fixed-prize tournament to a first-price auction. The reason is that, if the innovation technology is subject to large random factors, holding an auction may leave higher rents to firms.

/pdf/fixed-prize-tournaments-versus-first-price-auctions-in-24b2xxdk56.pdf

Anja Schöttner

Papers

Relational Contracts, Multitasking, and Job Design

Hidden Benefits of Reward: A Field Experiment on Motivation and Monetary Incentives

Optimal Sales Force Compensation in Dynamic Settings: Commissions vs. Bonuses

Fixed-prize tournaments versus first-price auctions in innovation contests

Fixed-Prize Tournaments Versus First-Price Auctions in Innovation Contests