Evaluation of a Computer Simulation to Assess Subject Preference for Different Types of Incentive Pay

Abstract

The study investigated the use of a computer simulation, incorporating a behavioral choice procedure, to assess preference for different types of incentive pay. Subjects were ten undergraduates. Subjects chose to work under pay systems in which they earned 0%, 25%, 50%, 75% or 100% of their total simulated pay in incentives. Subjects were faced with choices involving higher, riskier pay versus lower, more stable pay. Work performance was simulated. The independent variable was the percentage of monthly living expenses relative to expected total pay. Two values were examined, 85% and 95%, using an ABAB design. Each phase lasted 2 simulated years. After four weeks, subjects paid expenses. Every three months, subjects chose the pay system they preferred. The adequacy of the simulation was assessed by examining the stability of choices under the two expense conditions and determining whether subjects chose lower, more stable pay when their expenses were higher. Three of the ten subjects demonstrated sensitivity to the independent variable.