Scott A Jeffrey

We find that approximately one third (29\%) of independent inventors continue to spend money and 51\% continue to spend time on projects after receiving highly diagnostic advice to cease effort. Using survey data from actual inventors, this paper studies the role of overconfidence, optimism, and the sunk-cost bias in these decisions. We find that inventors are more overconfident and optimistic than the general population. We also find that optimism and past expenditures increased perseverance after being told to quit, while overconfidence in judgment ability had no effect. After being told to quit, optimists spend 166\% more than pessimists and those having already spent, for example, \$10 000 spend another \$10 000. Copyright © 2007 John Wiley \& Sons, Ltd. [ABSTRACT FROM AUTHOR]

Goals are a ubiquitous part of life and have been shown to change behavior in many domains. This research studied the influence of goal attainment on risky choice behavior. Previous research has shown that goals tend to increase risk-seeking behavior when potential outcomes fall below a goal. We examined a new problem: Choice behavior when all potential outcomes in a choice set achieve or exceed the goal. Two studies show a “cushion effect” of goal attainment on choice under risk. When all possible outcomes of all options are above a salient and specific goal, decision makers are more likely to choose a risky option over a certain outcome with equal expected value (EV). We hypothesized that the attainment of a goal serves as a cushion that softens the negative emotions associated with receiving a gamble's low outcome. This allows risk taking that would otherwise be unattractive. Copyright © 2009 John Wiley \& Sons, Ltd. [ABSTRACT FROM AUTHOR]

Abstract: Using 150 interactions between entrepreneurs and potential investors, we study early stage business angel decision making. We show that contrary to the majority of past research that suggests they should, angel investors do not use a fully compensatory decision model wherein they weight and score a large number of attributes. Rather, they use a shortcut decision making heuristic known as elimination-by-aspects to reduce the available investment opportunities to a more manageable size. If an opportunity is diagnosed with a fatal flaw, it is rejected in the first stage of the decision making process, but all opportunities with no fatal flaws do progress beyond that stage. [ABSTRACT FROM AUTHOR]

Some organizations have begun to target their goal-setting method more closely to the ability levels of their employees. In this article, we report the results of a laboratory study of 138 undergraduate students, which shows that these “ability-based” goals are more effective at improving performance than a “one goal for all” approach, where everyone is assigned the same performance target. Results from repeated measure tests and other analysis of variance tests show that lower-ability individuals in the ability-based goal condition outperform those in the one goal for all condition. Lower- and moderate-ability participants in the one goal for all condition also experienced larger decreases in performance in later rounds. [ABSTRACT FROM PUBLISHER]

By analyzing observed interactions between entrepreneurs and business angels (BAs) on the Canadian reality TV showDragons’ Den, we find that BAs use a non-compensatory decision-making process when evaluating anticipated risk and return. This is consistent with our hypotheses that BAs use decision heuristics (shortcuts) to conserve cognitive effort when deciding whether or not to invest in business opportunities proposed by entrepreneurs. Our results further our understanding of how and when behavioral decision theory can inform real-life BA investment decision processes. Additionally, the results offer practical implications for entrepreneurs interested in pitching proposals to BAs. [ABSTRACT FROM AUTHOR]

This article studies the motivational power of hedonic noncash incentives compared to the motivational power of an equivalent amount of cash. In a laboratory study, working adults who engaged in a challenging mental task performed better in pursuit of a noncash incentive than in pursuit of a cash incentive of equal cash value, even though they stated a preference to receive the cash award. Justification concerns regarding the consumption and purchase of luxurious hedonic goods are found to be a major cause of this behavioral inconsistency. These findings suggest that firms must be careful in asking employees what incentives they prefer, because the preferred incentive may not be the one that leads to the best performance. [ABSTRACT FROM AUTHOR]

This article reports the results of a survey given to 1003 participants who were eligible to receive travel incentives. Both recipients of the incentive (714) and non-recipients (289) replied to questions regarding what makes a travel incentive motivating, what could make the incentive more motivating, and how travel's motivational appeal compares to other incentives offered by companies. In addition, participants were asked to ask how they felt about the firm offering these incentives. The article finds that travel is highly motivating to employees and creates positive feelings towards the company by recipients of the incentive. The article also finds that there are limited negative feelings towards the company expressed by non-recipients. Implications for design and implementation are discussed. [ABSTRACT FROM AUTHOR]

Using data from 441 call center employees at a large North American financial services firm, we studied how the frequency of thinking about an incentive available for performance led to increased output on an important performance metric. We find that people think more frequently about noncash tangible incentives (merchandise and travel) than cash incentives and that as the frequency of thought increases, performance increases. This leads to a larger performance boost for tangible incentives compared to a cash incentive of equal purchasing power. These results show an additional benefit from the use of tangible incentives and help answer the question regarding the psychological processes which make incentives motivating. [ABSTRACT FROM AUTHOR]

Many firms in North America use tangible incentives, physical items that are noncash yet contingent on performance, to reward and motivate their employees. Yet there has been almost no research done on the properties of tangible incentives that make them motivating to employees. Therefore, a significant amount of money is being spent on tangible incentives with a limited understanding of how they can best be utilized. This article does not attempt to extend the debate regarding the use of extrinsic incentives and their effect on intrinsic motivation. Rather, it focuses on the characteristics of tangible incentives and why employees find them to be motivating. It introduces and explores the psychological concepts of justifiability, social reinforcement, separability, and evaluability, and examines how they affect the motivational power of tangible incentives.

We find that approximately one third (29%) of independent inventors continue to spend money and 51 % continue to spend time on projects after receiving highly diagnostic advice to cease effort. Using survey data from actual inventors, this paper studies the role of overconfidence, optimism, and the sunk-cost bias in these decisions. We find that inventors are more overconfident and optimistic than the general population. We also find that optimism and past expenditures increased perseverance after being told to quit, while overconfidence in judgment ability had no effect. After being told to quit, optimists spend 166 % more than pessimists and those having already spent, for example, $10 000 spend another $10 000. Copyright # 2007 John Wiley & Sons, Ltd. key words inventor behavior; sunk-cost bias; optimism; overconfidence; decision biases

Goals are a ubiquitous part of life and have been shown to modify behavior. This paper studies choice behavior when all outcomes in the choice set achieve or exceed the goal. Two studies report a persistent "Goal Effect". Specifically, when all outcomes of all options are above a salient and specific goal, decision-makers are more likely to choose a risky option over a certain outcome with equal expected value. It is hypothesized that the goal serves as a comparison point used to soften the negative utility associated with receiving a worse outcome than the foregone sure thing.

Goals are an important aspect of any organization's performance measurement system. Yet setting appropriate goals to motivate individuals in the organization is not a trivial task. In this study we investigate an alternative to both single stretch goals and individual goals in the form of tiered goal systems. Tiered goals have received increased practitioner attention with companies such as BI(R) using goal bands in their GoalQuestTM product. While prior academic literature has pointed to this approach as viable (Latham and Locke 1991) there has been no empirical testing of either its effectiveness over time or its effectiveness against other established goal setting approaches such as the single stretch goal. In this study we investigate not only the performance outcome but also some of the underlying cognitive processes in terms of goal commitment, goal attractiveness and self-efficacy. Our results show an initial significant increase in performance when the tiered goal system...

ABSTRACT Economic theory predicts that cash is alwaysa better incentive than any non-cash reward of equal market value due to the fungibility associated with cash; there is also evidence that people’s stated preferences follow thismaxim. However, psychological research explored in this paper suggests that rewards based on this stated preference are not necessarily those for which the most effortis exerted. This paper introduces the

Abstract: Using survey data on field sales employees who earn tangible rewards, we find that as the frequency of recall of the rewards increases, perceived organizational support rises. After controlling for all other widely accepted antecedents for POS such as leader-memberexchange, organizational justice, and human resource practices, recall contributes significantly to POS. Implications for firms that offer tangible incentives are discussed. ,3 Labor is estimated to comprise over 70% ofa firm’s total costs (Blinder, 1990). Beyond

ABSTRACT: This study examines factors influencing the difficulty of self-set goals and performance in a setting where employees were able to choose their performance goal from a menu of three choices established by management. Rewards for goal attainment were increasing in the difficulty of the goal. We develop a behavioral model of the factors expected to affect employees’ goal choices and performance. Anticipated influences on goal difficulty include employees’ impression management intentions, past performance, experience, and prior eligibility for rewards. We also expect performance to be related to goal difficulty. We use a unique combination of archival and questionnaire data from 476 employees at several call centers of a financial services company to test our hypotheses. All predictions are supported: the difficulty of self-set goals is negatively associated with employees’ impression management intentions; employees with better past performance set more difficult goals; and...