When Ramesh rolled the die for the third participant, Anoopum, it landed on 5. According to our randomization process, this placed him in the highest-level bonus condition. Ramesh explained to Anoopum that for each game in which he reached the good level of performance he would be paid 200 rupees and that he would receive 400 rupees for each game in which he reached the very good score. Anoopum made a quick calculation: six games multiplied by 400 rupees equaled 2,400 rupees—a veritable fortune, roughly equivalent to five months’ pay. Anoopum couldn’t believe his good luck.
The first randomly selected game for Anoopum was Labyrinth.* Anoopum was instructed to place a small steel ball at the start position and then use the two knobs to advance the small ball through the maze while helping it avoid the trap holes. “We’ll play this game ten times,” Ramesh said. “If you manage to advance the ball past the seventh hole, we’ll call this a good level of performance, for which you will be paid two hundred rupees. If you manage to advance the ball past the ninth hole, we’ll call that a very good level of performance, and you will get four hundred rupees. When we’ve finished with this game, we’ll go on to the next. Everything clear?”
Anoopum nodded eagerly. He grabbed the two knobs that controlled the tilt of the maze surface and stared at the steel ball in its “start” position as if it were prey. “This is very, very important,” he mumbled. “I must succeed.”
He set the ball rolling; almost immediately, it fell into the first trap. “Nine more chances,” he said aloud to encourage himself. But he was under the gun, and his hands were now trembling. Unable to control the fine movements of his hands, he failed time after time. Having flubbed Labyrinth, he saw the wonderful images of what he would do with his small fortune slowly dissolve.
The next game was Dart Ball. Standing twenty feet away, Anoopum tried to hit the Velcro center of the target. He hurled one ball after another, throwing one from below like a softball pitch, another from above as in cricket, and even from the side. Some of the balls came very close to the target, but none of his twenty throws stuck to the center.
The Packing Quarters game was sheer frustration. In a minuscule two minutes, Anoopum had to fit the nine pieces into the puzzle in order to earn 400 rupees (if he took four minutes, he could earn 200 rupees). As the clock ticked, Ramesh read out the remaining time every thirty seconds: “Ninety seconds! Sixty seconds! Thirty seconds!” Poor Anoopum tried to work faster and faster, applying more and more force to fit all nine of the wedges into the square, but to no avail.
At the end of the four minutes, the Packing Quarters game was abandoned. Ramesh and Anoopum moved on to the Simon game. Anoopum felt somewhat frustrated, but he braced himself and tried his utmost to focus on the task at hand.
His first attempt with Simon resulted in a two-light sequence—not very promising. But, on the second try, he managed to recall a sequence of six. He beamed, because he knew that he had finally made at least 200 rupees, and he had eight more chances to make it to 400. Feeling as though he was finally able to do something well, he tried to increase his concentration, willing his memory to a higher plane of performance. In the next eight attempts, he was able to remember sequences of six and seven, but he never made it to eight.
With two more games to go, Anoopum decided to take a short break. He went through calming breathing exercises, exhaling a long “Om” with each breath. After several minutes, he felt ready for the Roll-up game. Unfortunately, he failed both the Roll-up game and the Recall Last Three Numbers task. As he left the community center, he comforted himself with the thought of the 200 rupees he had earned—a nice sum for a few games—but his frustration at not having gotten the larger sum was evident on his furrowed brow.
The Results: Drumroll, Please…
After a few weeks, Ramesh and the other four graduate students finished the data collection in a number of villages and mailed me the performance records. I was very eager to take a first look at the results. Was our Indian experiment worth the time and effort? Would the different levels of bonuses tally with the levels of performance? Would those who could receive the highest bonuses perform better? Worse?
For me, taking a first peek into a data set is one of the most exciting experiences in research. Though it’s not quite as thrilling as, say, catching a first glimpse of one’s child on an ultrasound, it’s easily more wonderful than opening a birthday present. In fact, for me there’s a ceremonial aspect to viewing a first set of statistical analysis. Early on in my research career, after having spent weeks or months of collecting data, I would enter all the numbers into a data set and format it for statistical analysis. Weeks and months of work would bring me to the point of discovery, and I wanted to be sure to celebrate the moment. I would take a break and pour myself a glass of wine or make a cup of tea. Only then would I sit down to celebrate the magical moment when the solution to the experimental puzzle I had been working on was finally revealed.
That magical moment is infrequent for me these days. Now that I’m no longer a student, my calendar is filled with commitments and I no longer have time to analyze experimental data myself. So, under normal circumstances, my students or collaborators take the first pass at the data analysis and experience the rewarding moment themselves. But when the data from India arrived, I was itching to have this experience once again. So I persuaded Nina to give me the data set and made her promise that she would not look at the data while I worked on it. Nina promised, and I reinstated my data analysis ritual, wine and all.
BEFORE I TELL you the results, how well do you think the participants in the three groups did? Would you guess that those who could earn a medium-level bonus did better than those who were faced with the small one? Do you think those hoping for a very large bonus did better than those who could achieve a medium-level one? We found that those who could earn a small bonus (equivalent to one day of pay) and the medium-level bonus (equivalent to two weeks’ worth of work) did not differ much from each other. We concluded that since even our small payment was worth a substantial amount to our participants, it probably already maximized their motivation. But how did they perform when the very large bonus (the amount equivalent to five months of their regular pay rate) was on the line? As you can tell from the figure above, the data from our experiment showed that people, at least in this regard, are very much like rats. Those who stood to earn the most demonstrated the lowest level of performance. Relative to those in the low-or medium-bonus conditions, they achieved good or very good performance less than a third of the time. The experience was so stressful to those in the very-large-bonus condition that they choked under the pressure, much like the rats in the Yerkes and Dodson experiment.
The graph below summarizes the results for the three bonus conditions across the six games. The “very good” line represents the percentage of people in each condition who achieved this level of performance. The “earnings” line represents the percentage of total payoff that people in each condition earned.
Supersizing the Incentive
I should probably tell you now that we didn’t start out running our experiments in the way I just described. Initially, we set about to place some extra stress on our participants. Given our limited research budget, we wanted to create the strongest incentive we could with the fixed amount of money we had. We chose to do this by adding the force of loss aversion to the mix.* Loss aversion is the simple idea that the misery produced by losing something that we feel is ours—say, money—outweighs the happiness of gaining the same amount of money. For