Working Paper: NBER ID: w26286
Authors: Erwin Bulte; John A. List; Daan van Soest
Abstract: Social scientists have recently explored how framing of gains and losses affects productivity. We conducted a field experiment in peri-urban Uganda, and compare output levels across 1000 workers over isomorphic tasks and incentives, framed as either losses or gains. We find that loss aversion can be leveraged to increase the productivity of labor. The estimated welfare costs of using the loss contract are quite modest – perhaps because the loss contract is viewed as a (soft) commitment device.
Keywords: nudges; loss aversion; productivity; clawback contracts; behavioral economics
JEL Codes: C93; D03; J01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tediousness of task (D29) | propensity to select clawback regime (G33) |
| clawback regime (G18) | productivity (O49) |
| prior experience with clawback regime (G33) | likelihood of choosing clawback regime (G33) |