Source Dependence in Effort Provision

Abstract

AbstractWe examine source dependence in the setting of effort provision. Our first experiment elicits preference over uncertain piece rate schemes to perform a real‐effort task. Our second experiment elicits effort after receiving an uncertain gift. We vary the probability of winning and the familiarity of natural sources of uncertainty. We show that subjects are averse to unfamiliar sources for moderate or high probability, but less so for low probability. Moreover, effort exhibits more insensitivity to the probability under the unfamiliar source compared with the familiar source. Our findings support the validity and generalizability of source dependence in applied settings.