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 language | English |
|---|---|
| Pages (from-to) | 82-92 |
| Number of pages | 11 |
| Journal | Judgment and Decision Making |
| Volume | 15 |
| Issue number | 1 |
| Publication status | Published - Jan 2020 |
| Externally published | Yes |
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