Wed, Sept 13 Colloquia: Radovan Vadovic: DT 2203: 3pm

Title: Free to Choose: Testing the Pure Motivation Effect of Autonomous Choice

Authors: Tomas Sjöström (Rutgers University), Levent Ülkü (ITAM), Radovan Vadovic (Carleton University)

Abstract: We conduct an experimental test of the long-standing conjecture that autonomy increases motivation and job performance. Subjects face a menu consisting of two projects: one risky and one safe. The probability that the risky project succeeds depends on the subject’s effort. In one treatment, subjects choose a project from the menu; in the other treatment, they are assigned a project from the menu. Using a difference-in-difference approach that controls for various forms of selection, we show that autonomy (the right to choose a project) has a significant pure motivation effect on effort. The effect is consistent with aversion to anticipated regret (but not with standard expected-utility maximization): if the agent chooses the risky project and fails, he will regret not having chosen the safe project, and this motivates him to work hard to avoid a failure. Regret theory makes further predictions that are also supported by the data. First, that the pure motivation effect is greater if the menu of feasible projects is diverse, generating a more meaningful choice among projects. Second, that the effort on the risky project is greater, the greater is the return to the safe project, because this (foregone) return determines the amount of regret. Finally, we find a significant negative relationship between the strength of the pure motivation effect and the subjects’ expected earnings.

**Radovan Vadovic is an Assistant Professor of Economics at Carleton University and a director of Carleton’s experimental economics laboratory (CELBER). Rado is an experimental and behavioural economist with wide interests, including studying the shape and formation of beliefs in strategic interactions, examining the behavioural foundations of choice, and exploring the grassroots of legitimacy and social validation. His work has been supported by numerous grants and has appeared in some of the leading economics journals, such as, Experimental Economics and Games and Economics Behavior.