The reinforcement paradox: Monetary incentives and Bayesian updating

Carlos Alós-Ferrer, Johannes Buckenmaier, Michele Garagnani, Alexander Ritschel

Research output: Contribution to journalArticlepeer-review


We report the results of two pre-registered experiments designed to study the reinforcement paradox: increased incentives often fail to increase and sometimes even decrease performance in Bayesian updating tasks. We argue that, in the presence of win/loss cues, higher incentives have two countervailing effects: increased error rates for reinforcement behavior (win-stay, lose-shift) and increased performance for decisions resulting from Bayesian updating. We find some evidence that incentives increase performance when the win/loss cue is removed whereas when reinforcement is active the effects of incentives are mixed.

Original languageEnglish (US)
Article number110200
JournalEconomics Letters
StatePublished - Feb 2022


  • Bayesian updating
  • Incentives
  • Reinforcement

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


Dive into the research topics of 'The reinforcement paradox: Monetary incentives and Bayesian updating'. Together they form a unique fingerprint.

Cite this