Side-Payment Neutralization Protocol
RCTClinical Trial
Evaluating peer referral incentives is confounded if referrers pass financial bonuses to referred candidates, creating direct candidate performance motivation rather than purely testing referrer screening capability.
Picture this
Imagine an employer offering a bonus to an employee if a friend passes a test. If the employee tells the friend "I will give you half the money if you try hard," the friend's extra effort contaminates the evaluation. By paying the employee the maximum bonus before the friend takes the test, the friend no longer receives any financial incentive to exert extra effort.
What the evidence says
Guaranteed pre-task bonus disbursement successfully decoupled referral task motivation from referrer incentives, isolating pure peer screening from candidate effort responses.
- Who was studied
- N = 407 returning referrals completing cognitive tasks in Kolkata, India.
- How
- Experimental intervention where referrers and referrals were informed prior to task execution that the referrer would receive the maximum performance bonus regardless of actual referral performance.
What to do
Guarantee pre-execution bonus payouts to referrers when testing screening mechanisms to prevent candidates from being privately incentivized through side payments.
From the source
"To eliminate the incentive for such a side payment, both the OP and referral are informed that the OP will be paid the maximum performance bonus regardless of the referral's performance before the referral performs either task."
468 Job Referrals in India AER Dec12.pdf