The pric(z)e of hard work: Different incentive effects of non-monetary and monetary prizes

•Monetary incentives outperform non-monetary incentives regarding effort levels.•Money links the intrinsic feeling of having fun at work to the resulting prize.•Thus, work quality decreases and perceived work fun depends on the received prize.•A large increase in the value of prizes does not decrease work quality.

Do non-monetary or monetary prizes induce the highest work performances in competitions? We conducted a real-effort lab experiment to test for differences in the effect of both incentives on work productivity. Our main findings are that the performances of subjects in pursuit of a monetary prize exceed those of subjects in pursuit of non-monetary incentives. However, the work quality and the retrospective feeling of having had fun at work, which is associated with the received prizes, decrease in combination with greater effort. Furthermore, a competition with monetary prizes appears to label winners and losers. If non-monetary prizes are used, losers are, to a certain extent, more able to adjust their feeling of satisfaction by changing the subjectively perceived prizes.