Your Success is My Motivation

Abstract

We study how an individual’s effort choice is impacted by feedback on her own past performance and another individual’s past performance. In an effort choice problem where effort is costly but increases the chance of receiving a prize, subjects who failed in the previous period increase their effort in the next period. More interestingly, failed subjects who observe that their partner succeeded exert higher effort in the next period than failed subjects who observe that their partner also failed — behavior consistent with behindness aversion. This effect is more pronounced for female subjects than male subjects, suggesting that failing women are more motivated by the success of others than failing men. Rather than letting subjects work in isolation, we find that the highest joint effort can be achieved by matching failed and successful subjects into pairs and providing feedback about the other’s performance. Our results suggest that social comparisons in independently performed and paid tasks may mitigate moral hazard.