Differential Performance in High vs. Low Stakes Tests: Evidence from the GRE Test

Abstract

We study how different demographic groups respond to incentives by comparing their performance in ‘high’ and ‘low’ stakes situations. The high stakes situation is the Graduate Record Examination (GRE), and the low stakes situation is a voluntary experimental section of the GRE. We find that males exhibit a larger drop in performance between the high and low stakes examinations than females, and that whites exhibit a larger drop in performance than minorities. Differences between high and low stakes tests are partly explained by the fact that males and whites exert lower effort in low stakes tests compared with females and minorities.