Unraveling the Complexity of Incentive Design in a Bounded Rationality World
The article explores how traditional theories about how people make decisions may not always hold true in real life. By using computer simulations, the researchers found that even in a simple game, players' expectations and lack of prior knowledge can lead to unexpected outcomes. In one simulation, players' expectations played a crucial role in determining results. In another simulation, offering payment incentives alone did not always lead to higher effort from risk-averse players. However, using a specific learning method helped players produce better results. This study helps us better understand how to design incentives in situations where people may not always act rationally.