Experimental evidence on financial incentives, information and decision-making

This paper reports on a series of experiments aimed at exploring in greater detail previous work on the effects of financial incentives on information use and task performance in a principal-agent setting. The paper also develops some new statistical modelling in the area of experimental testing including incorporation into the modelling approach of data from post-experiment questionnaires. We find significant support for the finding that profit-related individual money rewards encourage increased accessing of valuable but costly past profit information by agents – and that this in turn enhances individual performance in earning profit for the agency.