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Semantic Processing Theory Could Help Explain the Effectiveness of Creativity Incentives: A Numerical Experiment

Two seminal accounting studies on creativity and incentives find that output creativity is insensitive to creative effort. They compare a one-dimensional quantity contract that measures only output quantity and a multi-dimensional creativity-weighted contract that measures both output quantity and output creativity. These studies find that workers simplify creativity-weighted contracts by focusing primarily on increasing creativity, but they cannot increase output creativity enough to compensate for the sacrifices they make to output quantity, i.e. output creativity is insensitive to incremental increases in creative effort. Other studies, however, report results that suggest output creativity is indeed sensitive to creative effort in some circumstances. To examine these differing results, I use a numerical experiment. I model workers in quantity and creativity-weighted contracts, and I proxy creative effort as choosing between fine semantic processing (less creative) and coarse semantic processing (more creative). My numerical experiment produces results that largely show output creativity's insensitivity to creative effort when the task is more inherently creative and output creativity's sensitivity to creative effort when the task is less inherently creative. More inherently creative tasks effectively require coarse semantic processing in both contracts, which limits workers' ability to give incrementally more creative effort when they receive creativity incentives.


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