Incentives and Perceptual Differentiation

Abstract

We examine the relation between monetary rewards, cognitive capabilities, dimensions of effort and how they affect decision-making in complex contexts. Using an experiment, we extend previous research with other effort areas. We find that the effect of incentives depends on the cognitive capabilities, type of tasks, and educational background. In contrast to the literature in behavioral studies, we find that monetary incentives do not affect individuals with highly developed abilities in perceptual differentiation to increase the duration of their tasks. Instead, our study proposes that this type of subjects induce their efforts to disentangle key information in a shorter period of time.

Keywords: Cognition, Perceptual Differentiation, Decision Rules, Experiment, Incentives, Judgment, Context

JEL Classification: M2