An Experiment on Temperament and Decision Making Under Uncertainty

By Mark Pingle

Abstract

In this paper we report the results of an experiment exploring the interplay between a task selection problem with uncertainty, complexity and contract form. We find that there is individual heterogeneity in performance that can be attributed to variations in ``temperament'', a phenomena that psychology literature has recently suggests is important. Secondly, we find that individuals vary their search intensity as a function of the form of compensation, name whether they receive a bonus or a penalty. Finally, we find that the impact of heterogeneity on performance is non-linear, with individual effects being most important for tasks of moderate complexity.