The Effects of Performance-Contingent Financial Incentives in Online Labor Markets

Abstract

Online labor markets such as Amazon Mechanical Turk (MTurk) have emerged as platforms that facilitate the allocation of productive effort across global economies. Many of these markets compensate workers with monetary payments. We study the effects of performance-contingent financial rewards on work quality and worker effort in MTurk via two experiments. We find that the magnitude of performance-contingent financial rewards alone affects neither quality nor effort. However, when workers working on two tasks of the same type in a sequence, the change in the magnitude of the reward over the two tasks affects both. In particular, both work quality and worker effort increase (alternatively decrease) as the reward increases (alternatively decreases) for the second task. This suggests the existence of the anchoring effect on workers’ perception of incentives in MTurk and that this effect can be leveraged in workflow design to increase the effectiveness of financial incentives.