- Time is money - Time pressure, incentives, and the quality of decision-making
- Journal of Economic Behavior & Organization
- Volume | Issue number
- 61 | 3
- Pages (from-to)
- Number of pages
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
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.
Keywords: Quality of decision-making; Time pressure; Incentives; Beauty-contest experiment
JEL classification codes: C72; C91
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