Real Effort Versus Chosen Effort in Experiments

Abstract

Experimental research on individual decision-making with respect to effort is an important stream in management accounting research. There are two different concepts to operate effort in laboratory experiments, real effort, where participants are asked to perform an experimental task and chosen effort, where costs are used as a proxy for effort. Whereas chosen effort is a very abstract but clean way of operating effort, real effort experiments always need a proxy, i.e., a performance measure, for effort. In addition, it seems that skills and a utility from work have important impacts on the outcomes of real effort experiments. We examine the equivalence of the two concepts of effort in experiments. More specific, we examine whether there are differences in effort levels between chosen effort and real effort, and investigate whether reciprocal behavior is overstated under chosen effort compared to real effort, where participants may derive a utility from work. Results support previous findings on reciprocity and indicate that participants do not react very different under real effort compared to a chosen effort setting. In particular, participants derive a utility from work, shown by generally higher levels of effort under real effort, but people do not act less reciprocal. Our findings thus show that both experimental methods, chosen effort and real effort, are appropriate ways of operating effort in experiments.

Keywords: real effort, chosen effort, reciprocity, experiment

JEL Classification: C90, C91