Deposit? Yes, please! The effect of different modes of assigning reward-and deposit-based financial incentives on effort 283 9 In particular, motivation or effort may increase when loss averse individuals work towards preventing the loss of a deposit (compared to realizing a gain of the same size), and if individuals anticipate this, they may take up deposits. In the present study, preference for deposit-based incentives and the personal characteristics on which the informed advice was based, e.g., loss aversion, were elicited at baseline irrespective of the experimental condition, we can compare the effectiveness of the deposit-based incentive among different types of individuals. This enhances the understanding of which individuals benefit most from this type of incentive scheme. Hence, our work will provide further insight into the often supposed (but rarely studied) link between loss aversion and take-up and/or effectiveness of deposit-based incentives.21 Our findings suggest that respondents who are able to choose an incentive scheme after receiving advice allocate more effort and earn more than respondents randomly allocated to an incentive scheme. In respondents randomly assigned to incentive schemes, no effects of deposit-based incentives were observed compared with regular rewards. Interestingly, our results show that those who follow the advice to take up deposit-based incentives earn more and allocate more effort compared to those who were assigned to deposit-based incentives randomly, but no such effects are found for incentives based on rewards. The only predictor of take-up of deposit-based incentives was demand for commitment, which may suggest that the effect of deposit-based incentives could partially be due to sophisticated individuals self-selecting into deposits, and that sophisticated individuals are not easily identified through measures of present bias and loss aversion. Materials & Methods Approval for this online experiment was provided by Erasmus School of Economics’ (ESE) internal review board, section Experiments (reference: Application 202109). Furthermore, we prepared a demo version of the experiment for review (https://tinyurl.com/436z7nzd). Sample and recruitment A sample of n=228 respondents was recruited through the ESE Econlab panel, a system designed to recruit students for research participation. Panel members are typically (former) ESE students, i.e., students enrolled in economics,
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