Uri Gneezy

Last updated
Uri Gneezy
Uri Gneezy.jpg
Born (1967-06-06) June 6, 1967 (age 56)
Tel Aviv, Israel
Nationality Israeli American
Academic career
Institution University of California, San Diego
Field Behavioral Economics
Negotiation
Incentives
Alma mater Tel Aviv University
Tilburg University
Information at IDEAS / RePEc

Uri Hezkia Gneezy (born June 6, 1967) is an Israeli-American behavioral economist, known for his work on incentives. He currently holds the Epstein/Atkinson Endowed Chair in Behavioral Economics at the University of California, San Diego's Rady School of Management. [1] He is also a visiting research professor at the University of Amsterdam and NHH in Bergen.

Contents

Education and career

Before joining the Rady School, Gneezy was a faculty member at the University of Chicago, Technion – Israel Institute of Technology, and Haifa University. He obtained his BA degree with honors in economics from Tel Aviv University, and his MA and PhD in economics in 1997 from the Center for Economic Research at Tilburg University in the Netherlands. [1]

Gneezy's research focuses on using both lab and field experiments to study how people react to incentives. He is an expert in designing simple experiments that challenge our intuitions about people's behavior. His work has important implications for the design of incentive systems in various settings.

His first popular science book, The Why Axis , [2] co-authored with John A. List, discussed how using field experiments can improve our understanding of economic interactions in the real world. [3] The book covered topics such as gender and competition, discrimination, and online behavior. The main argument of the book is that executives and policy makers may believe they are basing their decisions on data, but often the data they use is not showing what they believe it does. To avoid this problem, they need to use data that can directly measures causality to inform their decisions.

Gneezy's second book, Mixed Signals , [4] published in March 2023, focuses on the signals that incentives send and how understanding and framing these signals can increase the effectiveness of incentives. He explains how incentives shape the story we tell, distinguishing between social signaling from self-signaling. The book highlights how incentives that send mixed signals often have unintended consequences and how understanding this problem of mixed signals can be used in designing incentives that achieve their intended goals.

Gneezy has made significant contributions to the field of behavioral economics, and his research has explored various topics, including the crowding out of incentives, gender differences in reaction to competitive incentives, deception, and habit formation.

In addition to his academic work, Gneezy co-founded Gneezy Consulting, a business consulting company that specializes in behavioral economics. The company provides services to businesses and organizations seeking to better understand and utilize behavioral economics in their decision-making processes.

Gneezy's research has had a significant impact on the field of behavioral economics [5] and has contributed to a better understanding of how incentives can be used to motivate behavior.

Research

Since receiving his Ph.D. from Tilburg University in 1997, Gneezy has started a few lines of research that have become part of the agenda in behavioral economics. Examples include papers on how incentives may crowd out desired behavior, gender differences in reaction to competitive incentives, the price of discrimination, how incentives affect deception and how to use incentives to enhance habit formation. In his research, he typically starts with new and original questions the literature has not yet investigated, and addresses them with simple empirical demonstrations of powerful psychological effects. [6]

How incentives can crowd-out the desired behavior

Gneezy’s early research was on the topic of crowding out of incentives. This phenomenon occurs when the introduction of extrinsic incentives, such as financial rewards or punishment, undermines the internal drive to perform a task for its own sake.

One of Gneezy's seminal studies on crowding out was conducted in collaboration with Aldo Rustichini, and it involved daycare centers in Israel. The centers had a problem with parents who were frequently late to pick up their children. In a field experiment, Gneezy and Rustichini implemented a fine for late pick-ups to incentivize parents to be more punctual. Surprisingly, after the fine was introduced, the number of late pick-ups increased. They observed that the fine had effectively transformed the social norm of punctuality into a market norm of paying for a service. The fine served as a signal that being late is not that bad, and transformed the interaction into an exchange.

In another paper with Rustichini they present a set of experiments showing that participants who were offered monetary incentives performed worse than those who were offered no compensation. In subsequent studies, Gneezy and his colleagues explored the conditions under which extrinsic incentives can crowd out intrinsic motivation. They found that when tasks are perceived as boring or uninteresting, extrinsic incentives can enhance motivation. However, when tasks are perceived as inherently interesting, the introduction of extrinsic incentives can backfire and lead to a decrease in motivation.

Gneezy's work on crowding out has important implications for the design of incentive systems, both in the workplace and in other settings. It suggests that managers and policymakers should be cautious about using extrinsic incentives, and should carefully consider the potential effects on intrinsic motivation.

Choking under pressure and habit formation

Together with Dan Ariely, George Loewenstein and Nina Mazar, Gneezy studies the impact of offering high levels of incentives on performance. They found that when participants were offered high levels of compensation, their performance on the tasks decreased relative to a group that was offered lower payoffs. The authors explained this phenomenon using the concept of choking under pressure.

With Gary Charness, they ask “Can incentives be effective in encouraging the development of good habits?” They investigate the post-intervention effects of paying people to attend a gym eight times during a month. They find a marked attendance increases after the intervention. They argue that there is scope for financial intervention in habit formation, particularly in the area of health. In a related paper with Alexander Cappelen, Gary Charness, Mathias Ekström and Bertil Tungodden, they report the results of an experiment testing whether incentives to exercise can improve academic performance. They find strong support for this hypothesis: university students who were incentivized to go to the gym had a significant improvement in academic performance.

Gender and competition

Gneezy coauthored a paper with Muriel Niederle and Aldo Rustichini about gender differences in reaction to competitive incentives. The paper showed that while there was no gender difference in performance when participants were paid based on piece rate, introducing competitive incentives motivated the men, but not the women, to increase performance. Studying the “nature vs nurture” question with respect to gender differences in competition, he found (together with Ken Leonard and John List), that in a matrilineal society, when women have equal power in the household, the gender difference in competition disappear. This finding shows that some of the difference is due to culture.

Rachel Croson and Gneezy offered a general understanding of gender differences in economic activities, pointing to three areas in which men and women have different economic preferences: social behavior, competitiveness and risk taking. With regard to the latter, Gneezy and Gary Charness demonstrate, using existing data, strong gender differences in risk taking.

Deception: The Role of Consequences

In a 2005 paper, Gneezy pioneered the study of deception and lying in economics. The paper showed how people have aversion to lying and prefer an outcome if they can reach it without lying. He then demonstrated that people also care about how harmful this consequence his to others.

Extending this framework, Sanjiv Erat and Gneezy showed that people are averse to telling even white lies that have no negative consequences. Together with Agne Kajackaite, they showed how increasing the incentives to lie affect lying behavior, and joint with Joel Sobel, they showed how the probability of being discovered affects lying behavior.

Personal life

Gneezy currently resides in San Diego, California, with his wife professor Ayelet Gneezy and three children. [1]

Selected publications

Related Research Articles

<span class="mw-page-title-main">Behavioral economics</span> Academic discipline

Behavioral economics is the study of the psychological, cognitive, emotional, cultural and social factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by classical economic theory.

<span class="mw-page-title-main">Incentive</span> Something that motivates individuals to perform

In general, incentives are anything that persuade a person to alter their behavior in the desired manner. It is emphasized that incentives matter by the basic law of economists and the laws of behavior, which state that higher incentives amount to greater levels of effort and therefore higher levels of performance.

Managerial economics is a branch of economics involving the application of economic methods in the organizational decision-making process. Economics is the study of the production, distribution, and consumption of goods and services. Managerial economics involves the use of economic theories and principles to make decisions regarding the allocation of scarce resources. It guides managers in making decisions relating to the company's customers, competitors, suppliers, and internal operations.

Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law.

Personnel economics has been defined as "the application of economic and mathematical approaches and econometric and statistical methods to traditional questions in human resources management". It is an area of applied micro labor economics, but there are a few key distinctions. One distinction, not always clearcut, is that studies in personnel economics deal with the personnel management within firms, and thus internal labor markets, while those in labor economics deal with labor markets as such, whether external or internal. In addition, personnel economics deals with issues related to both managerial-supervisory and non-supervisory workers.

The overjustification effect occurs when an expected external incentive such as money or prizes decreases a person's intrinsic motivation to perform a task. Overjustification is an explanation for the phenomenon known as motivational "crowding out". The overall effect of offering a reward for a previously unrewarded activity is a shift to extrinsic motivation and the undermining of pre-existing intrinsic motivation. Once rewards are no longer offered, interest in the activity is lost; prior intrinsic motivation does not return, and extrinsic rewards must be continuously offered as motivation to sustain the activity.

<span class="mw-page-title-main">John A. List</span> American economist

John August List is an American economist known for establishing field experiments as a tool in empirical economic analysis. He works at the University of Chicago, where he serves as Kenneth C. Griffin Distinguished Service Professor; from 2012 until 2018, he served as Chairman of the Department of Economics. Since 2016, he has served as Visiting Robert F. Hartsook Chair in Fundraising at Indiana University Lilly Family School of Philanthropy. List is noted for his pioneering contributions to field experiments in economics, with Nobel prize winning economist George Akerlof and noted law professor Cass Sunstein writing that "List has done more than anyone else to advance the methods and practice of field experiments." Nobel prize winning economist Gary Becker quipped that "John List's work in field experiments is revolutionary."

Motivation crowding theory is the theory from psychology and microeconomics suggesting that providing extrinsic incentives for certain kinds of behavior—such as promising monetary rewards for accomplishing some task—can sometimes undermine intrinsic motivation for performing that behavior. The result of lowered motivation, in contrast with the predictions of neoclassical economics, can be an overall decrease in the total performance.

Tournament theory is the theory in personnel economics used to describe certain situations where wage differences are based not on marginal productivity but instead upon relative differences between the individuals. This theory was invented by economists Edward Lazear and Sherwin Rosen.

<span class="mw-page-title-main">Alvin E. Roth</span> American academic (born 1951)

Alvin Eliot Roth is an American academic. He is the Craig and Susan McCaw professor of economics at Stanford University and the Gund professor of economics and business administration emeritus at Harvard University. He was President of the American Economic Association in 2017.

Pay what you want is a pricing strategy where buyers pay their desired amount for a given commodity. This amount can sometimes include zero. A minimum (floor) price may be set, and/or a suggested price may be indicated as guidance for the buyer. The buyer can select an amount higher or lower than the standard price for the commodity. Many common PWYW models set the price prior to a purchase, but some defer price-setting until after the experience of consumption. PWYW is a buyer-centered form of participatory pricing, also referred to as co-pricing.

Warm-glow giving is an economic theory describing the emotional reward of giving to others. According to the original warm-glow model developed by James Andreoni, people experience a sense of joy and satisfaction for "doing their part" to help others. This satisfaction - or "warm glow" - represents the selfish pleasure derived from "doing good", regardless of the actual impact of one's generosity. Within the warm-glow framework, people may be "impurely altruistic", meaning they simultaneously maintain both altruistic and egoistic (selfish) motivations for giving. This may be partially due to the fact that "warm glow" sometimes gives people credit for the contributions they make, such as a plaque with their name or a system where they can make donations publicly so other people know the "good" they are doing for the community.

Social preferences describe the human tendency to not only care about one's own material payoff, but also the reference group's payoff or/and the intention that leads to the payoff. Social preferences are studied extensively in behavioral and experimental economics and social psychology. Types of social preferences include altruism, fairness, reciprocity, and inequity aversion. The field of economics originally assumed that humans were rational economic actors, and as it became apparent that this was not the case, the field began to change. The research of social preferences in economics started with lab experiments in 1980, where experimental economists found subjects' behavior deviated systematically from self-interest behavior in economic games such as ultimatum game and dictator game. These experimental findings then inspired various new economic models to characterize agent's altruism, fairness and reciprocity concern between 1990 and 2010. More recently, there are growing amounts of field experiments that study the shaping of social preference and its applications throughout society.

<span class="mw-page-title-main">Ayelet Gneezy</span>

Ayelet Gneezy is an associate professor of marketing at the Rady School of Management, UC San Diego.

Behavioral game theory seeks to examine how people's strategic decision-making behavior is shaped by social preferences, social utility and other psychological factors. Behavioral game theory analyzes interactive strategic decisions and behavior using the methods of game theory, experimental economics, and experimental psychology. Experiments include testing deviations from typical simplifications of economic theory such as the independence axiom and neglect of altruism, fairness, and framing effects. As a research program, the subject is a development of the last three decades.

Gary Charness is Professor of Economics and the Director of the Experimental and Behavioral Economics Laboratory in the Department of Economics at the University of California, Santa Barbara. Charness is an economist and social scientist, specializing in experimental and behavioral work; he is currently ranked 3rd in the world by RePEc in the field of experimental economics and has published nearly 80 academic articles. Charness is a contributor to several areas of economic research, including social preferences, identity and group membership, communication and beliefs, behavioral interventions, group decision-making, social networks, gender, and individual decision-making. A centerpiece of his research has been to effect beneficial social outcomes in difficult economic environments. Charness's work has been discussed and published in The New York Times and Science, as well as in other media. Charness is married and has three children.

Muriel Niederle is a professor in the Department of Economics at Stanford University. Niederle teaches courses at Stanford University focusing specifically on experimental economics and market design. Muriel Niederle is interested in studying behavioral and experimental economics. Niederle's most recent publication was "Probabilistic States versus Multiple Certainties: The Obstacle of Uncertainty in Contingent Reasoning" in November 2017. She was elected a Fellow of the Econometric Society in 2017.

The gift-exchange game, also commonly known as the gift exchange dilemma, is a common economic game introduced by George Akerlof and Janet Yellen to model reciprocacy in labor relations. The gift-exchange game simulates a labor-management relationship execution problem in the principal-agent problem in labor economics. The simplest form of the game involves two players – an employee and an employer. The employer first decides whether they should award a higher salary to the employee. The employee then decides whether to reciprocate with a higher level of effort due to the salary increase or not. Like trust games, gift-exchange games are used to study reciprocity for human subject research in social psychology and economics. If the employer pays extra salary and the employee puts in extra effort, then both players are better off than otherwise. The relationship between an investor and an investee has been investigated as the same type of a game.

Lise Vesterlund is a behavioral and experimental economist, and the Andrew W. Mellon Professor of Economics at the University of Pittsburgh. She is a research associate at the National Bureau of Economic Research. From 1997 to 2001, she was assistant professor at the Iowa State University. She is on the board of editors of the American Economic Journal: Economic Policy and of the Experimental Economics journal. Since 2018, she is a visiting professor at the Norwegian School of Economics.

<span class="mw-page-title-main">Aldo Rustichini</span> Italian-born American economist

Aldo Rustichini is an Italian-born American economist, academic and researcher. He is a professor of economics at University of Minnesota, where is also associated with the Interdisciplinary Center for Cognitive Sciences.

References

  1. 1 2 3 "Uri Gneezy". University of California, San Diego. Retrieved 5 March 2015.
  2. ↑ Gneezy, Uri; List, John (2013). The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life. New York: PublicAffairs, a Member of the Perseus Books Group. ISBN   978-1-61039-312-6.
  3. ↑ "Uri Gneezy Archives". Freakonomics. Retrieved 2023-03-06.
  4. ↑ Gneezy, Uri (3 February 2023). Mixed Signals. Yale University Press. ISBN   9780300255539 . Retrieved 2023-03-06.
  5. ↑ "Log in | Psychology Today". www.psychologytoday.com. Retrieved 2023-03-06.
  6. ↑ "Uri Gneezy CV (March 2011)" (PDF). Retrieved 5 March 2015.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.