CollegeBetter:ParimutuelBettingMarketsasaCommitmentDeviceandMonetaryIncentive

LesterLusher,AssistantProfessorDepartmentofEconomicsandPublicPolicyCenter

UniversityofHawaiiatManao

Monday,May14,201812:00–1:15pm,Education2010

Abstract: An extensive literature has investigated the efficacy of monetary incentive programs ineducation. This paper examines the role of commitment and motivation by evaluating a programcalled CollegeBetter.com which acts as a commitment device and monetary incentive to improveundergraduate academic performance. The zero-sum mechanism is based off a parimutuel bettingmarket,wherestudents joinapoolbyplacingamonetarywageronthemselvestoachievethepool's"commitmentchallenge."Studentswhosuccessfullycommittothechallenge1)recovertheirwagerand2)splitlosingwagersequally.Throughaseriesofsurveysandfieldexperiments,Ifindthatstudentswhosigned up for the program were low-achieving, overconfident, and self-identified procrastinators. Incontrast,commonly-usedmeasuresoftime-preferences(β-δ)wereweakpredictorsofselection.StudentsrandomlyacceptedtoparticipateweremorelikelytoraisetheirGPAthanstudentswhoappliedforaspotbutwererandomlyexcluded.Thistreatmenteffectwasdrivenbystudentsfromrelativelydisadvantagedbackgroundsandthosewith lowGPAsenteringtheprogram.Consistentwithlossaversion,havingthestudentrisktheirownmoneyisaprincipalcontributortotheeffectivenessofthemechanism.

Bio:LesterLusherisanAssistantProfessorfromtheDepartmentofEconomicsandPublicPolicyCenterattheUniversityofHawaiiatManoa.Lester'sresearchprojectshavespannedawiderangeoftopicswithineducation, includingtheroleofracialmatchinstudent-TArelationships,andtheimpactofschoolschedulesandsleep on student performance. His more recent work hasinvolved field experimentswithmobile Apps, including PocketPoints and Penji, which aim to implement concepts frombehavioral economics to improve college student outcomes.Lester is also the founder and researcher behindCollegeBetter.com, a program which gives students theopportunity to place monetary wagers on their academicoutcomes.