Time is money - Time pressure, incentives, and the quality of decision-making

Kocher, Martin G. und Sutter, Matthias (2006): Time is money - Time pressure, incentives, and the quality of decision-making. In: Journal of Economic Behavior and Organization, Vol. 61, No. 3: pp. 375-392

Abstract

Many decisions in economics and finance have to be made under severe time pressure. Furthermore, payoffs frequently depend on the speed of decision-making, as, for instance, when buying and selling stocks. In this paper, we examine the influence of time pressure and time-dependent incentive schemes on the quality of decision-making in an experimental beauty-contest game. We find that convergence to equilibrium is faster and payoffs are higher under low time pressure than under high time pressure. Interestingly, time-dependent payoffs under high time pressure lead to significantly quicker decision-making without reducing the quality of decisions.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > Chair of Empirical Economics
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: C72, C91
• Language: English