Working Hard or Working Smart?

Almost all jobs require a combination of cognitive effort and labor effort. The focus of the paper is on the effect of different incentive schemes on the chosen combination of these types of efforts. We use an experimental approach to show that tournament incentives may induce agents to work harder but not necessarily smarter. This effect was stronger for women. We then ran a "managerial bonus" experiment in which a preassigned manager receives a bonus whenever the overall performance of his/her group is above a given threshold level. Although the bonus does not affect the participants' direct incentives, it induces participants to lower their cognitive effort and increase their labor effort