Incentives, Effort, and the Cognitive Processes Involved in Accounting-Related Judgments

Abstract

In this paper, we investigate how the performance-related incentive effects of monetary payments depend on the cognitive processes involved in accounting judgment tasks. We argue that this dependency exists because the processes involved in encoding, retrieving, and combining information require varying effort levels and thus are differentially sensitive to effort increases resulting from the incentive. Considering this interaction of incentive effects and cognitive processes will help paint a more complete picture of cognitive performance in these tasks and will aid both evaluations of the generalizability of existing experimental results and efficient planning of the use of monetary incentives in future experiments.