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© National Institute of Economic and Social Research 2019

Does Social Cooperation Affect Macroeconomic Performance? Research Project

Putting in Effort for the Benefit of All: The Role of Reward and Effort Requirements

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Principal Investigator: Magda Osman

Magda Osman is a reader in Experimental Psychology at Queen Mary University of London. Her research takes a critical eye to well accepted views and challenge the status quo. As a result, she engages in a range of areas that include decision-making, learning, problem-solving, biases, risk and uncertainty, agency and control, and the unconscious.  

Among others, her work provides insights that methods, such as nudges, designed to improve our decision-making are not reliable, are ethically problematic, and that the public have concerns about them, especially if the nudges are designed by government bodies compared to scientists.

Project Summary

Many organisations face a compliance problem: how to motivate their members to increase their productivity and improve compliance with regulations/treaties which serve the good of the organisation, as well as the good of society (e.g., corporate social responsibility). The difficulty comes from the fact that members of the organisation may not be sufficiently motivated to put in more effort simply for cooperative ends.

 

To address this, some economists propose using financial incentives and linking them to performance. The psychological and behavioural economic literature suggest that there are problems with this, the most significant of which is that financial incentives, in and of themselves, are not a failproof way of increasing effort exertion and improving performance, so their effect on productivity is limited.

 

If not financial incentives, then what else? Evidence from social psychology and behavioural economics suggests that rather than financial rewards, organisations ought to consider the social forces driving human behaviour. For instance, people look to others as a way to regulate how much effort to put into doing something, so much so, that the mere presence of other people has repeatedly been shown to affect the amount of effort people exert.

 

Based on these insights, in this project we will investigate the potential of social forces (such as reputation building) as a way to boost the amount of effort people are willing to put into a cooperative situation. In our collaborative decision-making experiment, we will look at how to motivate people (using social forces vs. financial incentives) to increase the amount of physical effort they put into a task in which individual behaviour impacts how the entire group are eventually rewarded (task adapted from a popular behavioural economic method of examining cooperative behaviour in groups).

 

Our experimental set up is comprised of three stages, the first of which involves allocating people into groups of approximately 4 or 5, and then informing them that while they will benefit directly from the way they perform a task, their efforts will also impact the group overall. The more cooperative people are (measured by the amount of physical effort they put into the task during the second stage) the more the group will be rewarded and the more they will be rewarded personally. To introduce the role of social forces, in the third stage, all individual players will meet the rest of their group. For some of the groups, when they meet, they will be told how much effort each one of their group members put into the task. The impact on productivity will be measured, by repeating stages 2 and 3 again to compare productivity before and after receiving social feedback (i.e. how everyone in the group has performed), and compared against groups that get to meet their other group members, but where no social feedback is presented.

 

The idea of the experiment is to mimic typical workplace setting where employees contribute their time and effort rather than money in a controlled laboratory environment in order to reveal just how powerful social forces can be in motivating behaviour in group contexts, above and beyond performance related pay. 

Results

Results will be published here when available.