David Kiss, Malte Sandner, Daniel D. Schnitzlein
This paper investigates the effects of receiving a reward on effort of college freshmen. In our case, students could earn bonus points for their final exam if they passed a mid-term pre-exam. Based on administrative data from University records, we compare students who barely passed the pre-exam to those who failed in the exam. Difference-in-differences and regression discontinuity estimations suggest that receiving bonus points worsens final exam performance of male students, but does not have an effect on female students. These findings give new insights on how choice behavior is shaped by both incentives and revealed information on own skill. The strong negative effect on male students’ performance cannot be rationalized suggesting that one may have to draw on alternative explanations like gender-specific differences in overconfidence and/or in the sensitivity to incentives. The observation that boys do not react rational in our setting can add to the understanding why compared to girls, boys tend to underperform in school and university.
Keywords: rewards, behavioral economics, education, gender-specific differences