Susanne Neckermann

Awards: A View from Psychological Economics

Awards in the form of orders, decorations, prizes, and titles are ubiquitous in monarchies and republics, private organizations, not-for-profit, and profit-oriented firms. This paper argues that awards present a unique combination of different stimuli and that they are distinct and unlike other monetary and non-monetary rewards. Despite their relevance in all areas of life awards have not received much scientific attention. We propose to study awards and present results on a vignette experiment that quantifies and isolates the effects of different award characteristics such as the publicity associated with winning an award. Further, employing a unique data set, we demonstrate that there are substantial differences in the intensity of usage of awards across countries.

Employee Recognition and Performance: A Field Experiment

This paper reports the results from a controlled field experiment designed to investigate the causal effect of public recognition on employee performance. We hired more than 300 employees to work on a three-hour data-entry task. In a random sample of work groups, workers unexpectedly received recognition after two hours of work. We find that recognition increases subsequent performance substantially, and particularly so when recognition is exclusively provided to the best performers. Remarkably, workers who did not receive recognition are mainly responsible for this performance increase. This result is consistent with workers having a preference for conformity.

Awards at Work

Social incentives like employee awards are widespread in the corporate sector and may be important instruments for solving agency problems. To date, we have little understanding of their effect on behavior. Unique panel data from the call center of a Fortune 500 financial services provider allow us to estimate the impact of awards on performance. Winning an award for voluntary work behaviors significantly increases subsequent core call center performance. The effect is short-lived, mainly driven by underperforming agents, and is reflected mostly in dimensions of the job that are hard to observe. We discuss various theories that could explain the effect.

Awards as Incentives

Non-monetary incentives in the form of awards have so far escaped the attention of economists despite their widespread use. This paper presents an experiment conducted online at IBM to assess the impact of these kinds of extrinsic incentives. Introducing a hypothetical award has statistically significant effects on stated contributions to a public good. Our design allows the estimation of the impact of different award characteristics related to, for example, how public or how valuable the award is. We illustrate these findings by providing predictions about the behavior induced by a new award at IBM.

Awards: A View from Economics

This book makes a rational and eloquent case for the closer integration of ethics and economics. It expands upon themes concerned with esteem, self-esteem, emotional bonding between agents, expressive concerns, and moral requirements.

Quantity discounts on a virtual good: The results of a massive pricing experiment at king digital entertainment

We report on a natural field experiment on quantity discounts involving more than 14 million consumers. Implementing price reductions ranging from 9–70% for large purchases, we found remarkably little impact on revenue, either positively or negatively. There was virtually no increase in the quantity of customers making a purchase; all the observed changes occurred for customers who already were buyers. We found evidence that infrequent purchasers are more responsive to discounts than frequent purchasers. There was some evidence of habit formation when prices returned to pre-experiment levels. There also was some evidence that consumers contemplating small purchases are discouraged by the presence of extreme quantity discounts for large purchases.

Awards as Signals

Awards are widespread in all countries and are prevalent both in the public sphere and in the private sector. This paper argues, and empirically supports, that awards serve public functions and economists should take them seriously. Using a unique cross-country data set, we suggest that awards serve as signals. Awards are more prevalent the more difficult the position and status of an individual is to observe due to an anonymous and globalized setting.

Abundant but Neglected: Awards as Incentives

Economists traditionally focus on monetary compensation when examining incentives, but awards are of immense practical relevance as can be inferred from their prevalence in the form of state orders, decorations and prizes, according to Bruno Frey and Susanne Neckermann.

A Field Experiment in Motivating Employee Ideas

We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas.

Incentivizing Creativity: A Large-Scale Experiment with Tournaments and Gifts

This paper reports the results from a large-scale laboratory experiment investigating the impact of tournament incentives and wage gifts on creativity. We find that tournaments substantially increase creative output, with no evidence for crowding out of intrinsic motivation. By comparison, wage gifts are ineffective. Additional treatments show that it is the uncertain mapping between effort and output that inhibits reciprocity. This uncertainty is prevalent in creative and other complex tasks. Our findings provide a rationale for the frequent use of tournaments when seeking to motivate creative output.