TY  - RPRT
        AU  - Oxoby, Robert J.
        TI  - The Effect of Incentive Structure on Heuristic Decision Making: The Proportion Heuristic
        PY  - 2007/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 2857
        UR  - https://www.iza.org/publications/dp2857
        AB  - When making judgments, individuals often utilize heuristics to interpret information. We report on a series of experiments designed to test the ways in which incentive mechanisms influence the use of a particular heuristic in decision-making. Specifically, we demonstrate how information regarding the number of available practice problems influences the behaviors of individuals preparing for an exam (the proportion heuristic). More importantly the extent to which this information influences behavior depends critically on the way in which performance incentives are structured. In particular, relative compensation schemes magnify the influence of this heuristic while joint compensation schemes dampen its influence. We discuss these results with respect to the literature on effective compensation.
        KW  - incentives
KW  - heuristics
KW  - performance judgments
KW  - experiments
        ER  -