Creativity and Incentives

Charness, Gary; Grieco, Daniela

doi:10.1093/jeea/jvx055

Cited by 68 publications

(78 citation statements)

References 66 publications

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“…Results are largely mixed where different incentives can increase effort but do not necessarily increase creativity (see Charness and Grieco, 2017;Dutcher, 2012;Ederer and Manso, 2013;Erat and Gneezy, 2015;Gross, 2016;Kachelmeier et al, 2008;Kachelmeier and Williamson, 2010;Kachelmeier et al, 2015). 8 Understanding incentives is extremely important; however, our interest lies in understanding creative problem-solving skills as a function of group experience.…”

Section: Related Literaturementioning

confidence: 99%

Which Two Heads Are Better Than One?: Uncovering the Positive Effects of Diversity in Creative Teams

Dutcher

Rodet

2018

SSRN Journal

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Creative teams drive the idea-economy, yet the determinants of a team's ability to create new ideas are not universally agreed upon. Group-level diversity has gained the most traction as an explanation, where a team's performance is usually attributed to diversity over observed characteristics such as race, gender, or functional expertise. Most agree that these characteristics are not especially important, but rather serve as an indicator of diversity in experiences, which is the actual mechanism that improves team ability. We formalize and test if experientially diverse groups produce more ideas. Because group assignment to projects in the field is rarely exogenous, and experiential diversity is not measured in observational data, we use a laboratory experiment to test our proposal. We find that experientially diverse teams create more ideas and also find no additional effect for gender, racial, socioeconomic, or personality diversity. Our general finding for why diversity may be important indicates that if a correlation exists between characteristic diversity and experiential diversity, the characteristically diverse team will have a higher ability. This generalization can be used to unify divergent results from prior studies and can help explain how dissimilar corporate diversity policies could be equally successful.JEL Codes: C92, J24, M50, O30, O31, O34 Wilson for very helpful suggestions. Finally, this research would not be possible without the help of Michelle Raines in coordinating laboratory use.Given the role innovation plays in economic growth, scholars have long sought to understand how new and better ideas are created. One strand of literature posits that existing ideas are combined to form the new ideas that are the driving force behind modern economic growth (e.g., Weitzman 1998).If new creative ideas are the product of one's knowledge and experiences, then greater diversity in knowledge and experiences leads to greater creativity and greater innovation. In problem-solving contexts, it has been shown that teams can be more productive than individuals (e.g., Cooper and Kagel;2006), and are increasingly used in creativity-centered applications (Jaravel, Petkova, and Bell, 2018;Singh and Fleming, 2010;Wuchty, Jones and Uzzi, 2007;Uzzi et al., 2013). Companies wishing to take advantage of this insight have touted their diversity policies; however, the issue is not settled even among innovative companies.Consider the dissimilar approaches taken by Bell Labs, originally AT&T's research lab, and Google. Bell Labs established a culture where, "eccentric theorists mingled with hands-on engineers, gnarly mechanics, and businesslike problem-solvers, encouraging the cross-fertilization of theory with engineering" (Isaacson 48). Google's Project Aristotle was meant to understand team effectiveness, where their findings were summed up by one of their analysts as: "We were pretty confident that we'd find the perfect mix of individual traits and skills necessary for a stellar team -take one Rhodes Scholar, two...

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Section: Related Literaturementioning

confidence: 99%

Which Two Heads Are Better Than One?: Uncovering the Positive Effects of Diversity in Creative Teams

Dutcher

Rodet

2018

SSRN Journal

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“…3 For instance, Al-Ubaydli et al (2015) find increases in quality, while Johnson et al (2015) and Ederer and Manso (2013) find decreases in quality from pay-for performance compensation. There is also a new literature on incentives and creativity, documenting that financial incentives have a mixed effect on different dimensions of creative work, including quantity and quality (Kachelmeier et al, 2008;Charness and Grieco, 2014;Laske and Schröder, 2015;Erat and Gneezy, 2016). Some explanations for these results suggest that incentives may crowd out intrinsic motivation for performing certain tasks (Charness and Grieco, 2014;Erat and Gneezy, 2016), and that incentivizing quality may be difficult due to observability of quality (Kachelmeier et al, 2008;Al-Ubaydli et al, 2015).…”

Section: Introductionmentioning

confidence: 99%

Loss aversion and the quantity–quality tradeoff

2017

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Firms face an optimization problem that requires a maximal quantity output given a quality constraint. But how do firms incentivize quantity and quality to meet these dual goals, and what role do behavioral factors such as loss aversion play in the tradeoffs workers face? We address these issues with a theoretical model and an experiment in which participants are paid for both quantity and quality of a real effort task. Consistent with the basic economic theory, higher quality incentives encourage participants to shift their attention from quantity to quality. However, we also find that loss averse subjects shift their attention from quality to quantity to a greater degree when quality is weakly incentivized. These results can inform managers of the most appropriate ways to structure contracts.JEL Classifications: D24, J24, J31, J41

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“…Crosetto () and Mohnen and Ostermaier () used similar tasks to measure creativity. Charness and Grieco () had their participants write stories as another measure of creativity.…”

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confidence: 99%

“…4 Crosetto (2010) and Mohnen and Ostermaier (2013) used similar tasks to measure creativity. Charness and Grieco (2014) had their participants write stories as another measure of creativity. 5 The three letter sets (number of possible words): aehklllprstt (326), aeeeggllmnru (323), deehhimnnprt (321).…”

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How to manage creativity time? Results from a social psychological time model lab experiment on individual creative and routine performance

Brem

Utikal

2019

Creat Innov Manage

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Companies have long used various approaches for organizing their employees' time for creative and routine tasks in order to improve innovative performance. In this paper, we examine how work schedule autonomy affects individuals' creative and routine performance. We then evaluate non‐commissioned time models. Results of laboratory experiments with 233 participants reveal that while average routine performance is not affected by schedule autonomy, the effect of schedule autonomy on creative performance depends on the subject's impulsiveness. There is evidence of an inverse relationship between schedule autonomy and creative performance among subjects of low impulsiveness. Hence, our results indicate that the optimal management policy depends on the manager's focus on creative or routine performance and the types of employees the manager supervises. For routine performance, the creativity time model has no significant impact.

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Creativity and Incentives

Cited by 68 publications

References 66 publications

Which Two Heads Are Better Than One?: Uncovering the Positive Effects of Diversity in Creative Teams

Which Two Heads Are Better Than One?: Uncovering the Positive Effects of Diversity in Creative Teams

Loss aversion and the quantity–quality tradeoff

How to manage creativity time? Results from a social psychological time model lab experiment on individual creative and routine performance

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