The effect of incentive structure on search in the secretary problem

Yu-Chin HSIAO*, Simon KEMP

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)

Abstract

We tested the effectiveness of performance-based incentive structures using three incentive structures — commission base, best only and flat fee — and two levels of context — no context and house-selling — in an experiment in which participants made decisions in a variant of the secretary problem. Key measures of performance were the amount of search and the rounds in which the very best (optimal) offer was chosen. We found that having a commission-based proportional incentive did not produce better performance than having a flat payment for any of the performance measures considered. However, another performance-based incentive — the best only — increased the length of their searches and led to more optimal offers. These results applied both when there was no context and when the context was selling a house.

Original languageEnglish
Pages (from-to)82-92
Number of pages11
JournalJudgment and Decision Making
Volume15
Issue number1
Publication statusPublished - Jan 2020
Externally publishedYes

Bibliographical note

This paper is based on a chapter from Yu-Chin Hsiao’s dissertation written jointly at the University of Canterbury and Macquarie Graduate School of Management (Hsiao, 2018). Financial support was provided by the University of Canterbury, College of Business and Economics and Macquarie Graduate School of Management.

Keywords

  • Context
  • Incentive
  • Secretary problem
  • Sequential decision-making

Fingerprint Dive into the research topics of 'The effect of incentive structure on search in the secretary problem'. Together they form a unique fingerprint.

  • Cite this