May 20, 2019
Alex Imas is an assistant professor of economics in the Social & Decision Sciences department at Carnegie Mellon’s Dietrich College. His research dovetails perfectly into the department’s cross-disciplinary approach by blending behavioral and experimental economics, particularly how social concerns and emotions influence decision making and preferences.
His most current research examines the effectiveness of prosocial incentive schemes and how subtle changes in social norms can have large effects on behavior.
However, our conversation started with Alex discussing his findings with Sally Sadoff, from the University of California in San Diego, and Anya Samek from USC, on the effectiveness of loss contracts. Loss or clawback contracts are similar to incentives but instead of getting paid at the end of the work – contingent of successful achievement, the clawback or loss contract gives you money up front and you are forced to give it back what you don’t achieve the appropriate levels of performance. Many people would say they’d prefer a regular bonus structure – to get paid upon successful completion of their work – but Alex, Sally and Anya’s work found something different.
The loss contract proved to be a commitment device – it helped reduce shirking – and improved performance overall. Even people with a higher sense of loss aversion tended to benefit most from loss contracts. There are even some people who ended up preferring loss contracts.
In our grooving session, Kurt and Tim discuss their real-world experiences with clawbacks: do they work and in what circumstances are they most successful?
With that, please sit back and enjoy our conversation with Alex Imas.
Alex Imas (CMU): https://www.cmu.edu/dietrich/sds/people/faculty/alex-imas.html
Alex Imas (Personal): http://www.aleximas.com
Carnegie Mellon University: https://www.cmu.edu/
CMU Social and Decision Sciences Department: https://www.cmu.edu/dietrich/
“Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A field experiment.” https://rady.ucsd.edu/docs/faculty/Fryer_et_al_Teacher_Incentives_NBER_WP18237_2012.pdf By Roland G. Fryer, Jr., Steven D. Levitt, John List, Sally Sadoff
Index funds: https://www.investopedia.com/terms/i/indexfund.asp
“Myopic Loss Aversion and the Equity Premium Puzzle,” Thaler & Benartzi. https://www.nber.org/papers/w4369
Ashley Wilhans: https://www.hbs.edu/faculty/Pages/profile.aspx?facId=943704
Please Kill Me, Legs McNeil & Gillian McCain. https://www.goodreads.com/book/show/14595.Please_Kill_Me
Bob Dylan: https://en.wikipedia.org/wiki/Bob_Dylan
Phoebe Bridgers: https://www.youtube.com/watch?v=psZuC10Oa4E
Bright Eyes: https://www.youtube.com/watch?v=zwFS69nA-1w
Boy Genius: https://www.youtube.com/watch?v=OS48Lp34Zic
Conor Oberst: https://www.youtube.com/watch?v=8FnmP_1vABE
Soccer Mommy: https://www.youtube.com/watch?v=Ouem6cFXJvA
Run the Jewels: https://www.youtube.com/watch?v=AfuCLp8VEng
Tom Waits, “Jockey Full of Bourbon,” https://www.youtube.com/watch?v=IgMP9O-cIV8