Abstract: In the face of evolving labor markets and compensation structures, understanding how payment instruments with uncertainty in value affect worker productivity is relevant for academics and practitioners. This paper explores the behavioral impacts of two lottery-based bonus payments versus a certain bonus payment on individual productivity in real-effort tasks. Previous investigations yield mixed results and are often implemented in the field or with incentive payments of with different expected values. We implement a laboratory experiment to test one fixed payment with a $1 sure bonus payment and two lottery payment schemes of equivalent expected value but different risk (1% of $100 and 91% of $1.10) to provide a controlled test. We find individuals behave as expected utility maximizers, completing significantly more shapes of 8.93% (HpLr) to 19.4% (LpHr) under fixed payments. Participants with a high probability of low reward complete 11.5% more shapes than in the low probability of high reward treatment.

Abstract: We investigate the impact of matching gift schemes using lotteries, in which the lottery match would benefit the charity, on charitable giving. We recruit 1,402 online participants to investigate the effects in seven conditions: “No Match" (Control), two sets of matching schemes of varying equivalent expected values: EV=1 (1:1 Match, 1:10% of 10 tokens, and 1:1% of 100) and EV=0.5 (2:1 Match, 1:1% of 50 tokens and 1:0.5% of 100), where a token is $0.50. Participants complete three 10-token allocation decisions for hunger-related charities and one allocation is randomly selected for realization. The 1:1 matching significantly increases giving by 15.7% compared to No Match. We find that matching schemes with a small probability of a very large amount (1% and 0.5% of 100) have significantly higher rates of giving compared to No Match (p=0.02 and p=0.10 respectively) and do not statistically differ from the 1:1 matching (p=0.98 and p=0.62 respectively). Our results have economic significance for non-profits to fundraise at lower fundraising costs while increasing donations via matching.