Is It Worth while to Pay Referees?

• Author: Chang, Juin-jen
• Position: Refereeing scholarly articles

Juin-jen Chang [*]

Ching-chong Lai [+]

There are puzzles in refereeing scholarly articles: Why are referees willing to review a paper without payment, and is it worthwhile to pay referees in order to raise the review rate? Two interesting results are found in this article. First, when reviewing services are driven by reciprocity, the equilibrium participation of referees may exhibit the so-called self-fulfilling feature. Second, the optimal payment may not be zero if the referee receives the benefit of reputation gained by refereeing an article. In particular, this article will show that those journals whose status quo review rate is lower tend to pay reviewers more while journals whose status quo review rate is higher do not find it worthwhile to pay referees enough. This result implies that, in order to raise its quality, a journal with a low review rate is more likely to adopt a strategy to increase pay and attract a critical mass of referees.

1. Introduction

   Economics tells us that people make decisions by comparing costs and benefits; their behavior changes when the costs or benefits change; that is, people respond to incentives. Yet referees for journals are often paid nothing or paid little for their work. Engers and Gans (1998) provide a reasonable starting point for the mystery of why referees are willing to review a paper without payment. The basic idea is that referees are willing to review an article since they are concerned about the quality of journals and the editor can take advantage of this concern by reducing the monetary payment. However, there still exist some interesting and unsolved questions. Is it worthwhile to pay referees? Which journals would be more likely to pay referees more?

   To shed light on these questions, this article sets up a model in which the referee can receive the benefit of academic reputation gained by refereeing an article. Laband (1990), Hamermesh (1994), and Engers and Gans (1998) point Out that, if the participation rate of referees is high, then the review process could not only serve as a good screening mechanism but also provide added value to the paper and hence improve the quality of the journal. The higher the journal's quality, the more reputation benefits the referee can obtain. As a consequence, the referee's reputation benefits from reviewing a paper will increase with the total participation of referees. In other words, participating in refereeing papers not only improves the journal's quality but also the referee reaps a better academic reputation. When more potential referees are willing to review articles for the journal, reviewers reap a higher academic reputation stemming from reviewing an article for a high-quality journal. Thus, a referee providin g a reviewing service not only benefits himself but also other reviewers. Reviewing articles for a journal is thereby viewed as a reciprocal activity among all referees.

   Two interesting new results are found in our analysis. First, when reviewing a paper is driven by reciprocity, the possible snowballing effect emerges and so the equilibrium participation of referees may exhibit the so-called self- fulfilling feature and generates multiple equilibria. This explains why academic journals of different caliber have different review rates. Second, due to the fact that an academic reputation has an intrinsic mechanism to enhance the positive benefit of the referee's payment, the optimal payment may not be zero. This article will show that journals whose status quo review rate is lower tend to pay reviewers more, while journals whose status quo review rate is higher do not find it worthwhile to pay referees enough. This result implies that, in order to raise its quality, a journal with a low review rate is more likely to adopt a strategy to increase pay and attract a critical mass of referees.

2. The Model

   We start by formulating the model to illustrate the interaction between the editor of a journal and potential referees. In general, referees have the option to decline to review a paper. When a referee is not willing to review the paper, it will be returned to the editor; delay costs thus are imposed on the journal by a fixed amount [delta]. [1] In the meantime, the editor must send the paper out again. Accordingly, the journal's expected total delay cost, D, can be written as D...