Respect as an Incentive

Assuming that people care not only about what others do but also on what others think, we study respect as a non-monetary source of motivation in a context where the length of the employment relationship is endogenous. In our three-stage gift-exchange experiment, the employer can express respect by giving the employee costly symbolic rewards after observing his level of effort. This experiment sheds light on the extent to which symbolic rewards are used, how they affect employees’ further effort, the duration of relationships, and the profits of employers. Furthermore, we study whether employers’ decisions to give symbolic rewards are driven by strategic considerations, by manipulating the bargaining power of employers and employees. We find that employers make use of symbolic rewards and chiefly to express their satisfaction with the employee. Indeed, symbolic rewards are more frequently used when there is excess supply of labor in the market while they are used in almost the same proportion when the market is balanced and when there is excess demand of labor. They are associated with higher profits and increased probability of continuing employment relationships. Overall, however, the opportunity of expressing respect does not improve efficiency compared with an environment in which it does not exist, possibly due to a crowding-out of extrinsic incentives by the availability of non-monetary incentivesRespect; Symbolic rewards; Incentives; Labor market; Experiment

Performance Pay, Sorting and Social Motivation

Variable pay creates a link between pay and performance but may also help firms in attracting more productive employees. Our experiment investigates the impact of performance pay on both incentives and sorting and analyzes the influence of repeated interactions between firms and employees on these effects. We show that (i) the opportunity to switch from a fixed wage to variable pay scheme increases the average effort level and its variance; (ii) high skill employees concentrate under the variable pay scheme; (iii) however, in repeated interactions, efficiency wages reduce the attraction of performance pay. Social motivation and reputation influence both the provision of incentives and their sorting effect.Performance pay; incentives; sorting; social motivation; experiment

Respect as an Incentive

Assuming that people care not only about what others do but also on what others think, we study respect as a non-monetary source of motivation in a context where the length of the employment relationship is endogeneous. In our three-stage gift-exchange experiment, the employer can express respect by giving the employee costly symbolic rewards after observing his level of effort. This experiment sheds light on the extent to which symbolic rewards are used, how they affect employees’ further effort, the duration of relationships, and the profits of employers. Furthermore, we study whether employers’ decisions to give symbolic rewards are driven by strategic considerations, by manipulating the bargaining power of employers and employees. We find that employers make use of symbolic rewards and chiefly to express their satisfaction with the employee. Indeed, symbolic rewards are more frequently used when there is excess supply of labor in the market while they are used in almost the same proportion when the market is balanced and when there is excess demand of labor. They are associated with higher profits and increased probability of continuing employment relationships. Overall, however, the opportunity of expressing respect does not improve efficiency compared with an environment in which it does not exist, possibly due to a crowding-out of extrinsic incentives by the availability of non-monetary incentives.respect, symbolic rewards, incentives, labor market, experiment

Other-Regarding Preferences and Performance Pay - An Experiment on Incentives and Sorting

Variable pay not only creates a link between pay and performance but may also help firms in attracting the more productive employees (Lazear 1986, 2000). However, due to lack of natural data, empirical analyses of the relative importance of the selection and incentive effects of pay schemes are so far thin on the ground. In addition, these effects may be influenced by the nature of the relationship between the firm and its employees. This paper reports results of a laboratory experiment that analyzes the influence of other-regarding preferences on sorting and incentives. Experimental evidence shows that (i) the opportunity to switch to piece-rate increases the average level of output and its variance; (ii) there is a concentration of high skill workers in performance pay firms; (iii) however, in repeated interactions, efficiency wages coupled with reciprocity and inequality aversion reduce the attraction of performance related pay. Other-regarding preferences influence both the provision of incentives and their sorting effect.experiment; incentives; performance pay; selection

Evaluating hospital performance based on excess cause-specific incidence

Formal evaluation of hospital performance in specific types of care is becoming an indispensable tool for quality assurance in the health care system. When the prime concern lies in reducing the risk of a cause-specific event, we propose to evaluate performance in terms of an average excess cumulative incidence, referring to the center's observed patient mix. Its intuitive interpretation helps give meaning to the evaluation results and facilitates the determination of important benchmarks for hospital performance. We apply it to the evaluation of cerebrovascular deaths after stroke in Swedish stroke centers, using data from Riksstroke, the Swedish stroke registry

Feedback and Incentives: Experimental Evidence

This paper experimentally investigates the impact of different pay and relative performance information policies on employee effort. We explore three information policies: No feedback about relative performance, feedback given halfway through the production period, and continuously updated feedback. The pay schemes are a piece rate payment scheme and a winner-takes-all tournament. We find that, regardless of the pay scheme used, feedback does not improve performance. There are no significant peer effects in the piece-rate pay scheme. In contrast, in the tournament scheme we find some evidence of positive peer effects since the underdogs almost never quit the competition even when lagging significantly behind, and frontrunners do not slack off. Moreover, in both pay schemes information feedback reduces the quality of the low performers’ work.performance pay, tournament, piece rate, peer effects, information, feedback, evaluation, experiment

Feedback and Incentives : Experimental Evidence

This paper experimentally investigates the impact of different pay and relative performance information policies on employee effort. We explore three information policies: No feedback about relative performance, feedback given halfway through the production period, and continuously updated feedback. The pay schemes are a piece rate payment scheme and a winner-takes-all tournament. We find that, regardless of the pay scheme used, feedback does not improve performance. There are no significant peer effects in the piece-rate pay scheme. In contrast, in the tournament scheme we find some evidence of positive peer effects since the underdogs almost never quit the competition even when lagging significantly behind, and frontrunners do not slack off. Moreover, in both pay schemes information feedback reduces the quality of the low performers' work.evaluation ; feedback ; information ; laboratory experiments ; peer effects ; performance pay ; piece rate ; tournament

Effort Self-Selection and the Efficiency of Tournaments

When exogenously imposed, rank-order tournaments have incentive properties but their overall efficiency is reduced by a high variance in performance (Bull, Schotter, and Weigelt 1987). However, since the efficiency of performance-related pay is attributable both to its incentive effect and to its selection effect among employees (Lazear, 2000), it is important to investigate the ex ante sorting effect of tournaments. This paper reports results from an experiment analyzing whether allowing subjects to self-select into different payment schemes helps in reducing the variability of performance in tournaments. We show that when the subjects choose to enter a tournament, the average effort is higher and the between-subject variance is substantially lower than when the same payment scheme is imposed. Mainly based on the degree of risk aversion, sorting is efficiency-enhancing since it increases the homogeneity of the contestants. We suggest that the flexibility of the labor market is an important condition for a higher efficiency of relative performance pay.experiment ; Incentives ; performance pay ; selection ; selection ; tournament

Long-term oncological outcome and health-related quality of life after curative treatment of prostate cancer with HDR-brachytherapy and external beam radiotherapy

Prostate cancer (PC) is a major health problem among men in the western world. The prognosis of PC varies, with high mortality rates for high-risk disease in contrast to a mild course in low risk cancers with almost no risk of metastases. Radical treatment options for localized and locally advanced PC are surgery or different radiotherapy (RT) modalities. Randomized trials concerning the therapeutic effect of these treatment options are rare and have so far shown little difference in oncological outcome, but differences in patterns of side effects. Therefore, it is important to consider age, comorbidity and treatment induced effects on Health-Related Quality of Life (HRQoL) in the decision-making process pertaining to curative treatment of PC. The primary aim of this thesis was to evaluate the long-term oncological outcome in terms of local control, PC specific and overall survival and HRQoL after curative treatment for PC with combined high dose-rate brachytherapy (HDRBT) and external beam radiotherapy (EBRT). In a cohort study (Study 1), men treated with curatively intended radical prostatectomy (RP) or combined HDRBT and EBRT in Gothenburg from 1988-97 were investigated concerning long-term HRQoL measured by the EORTC QLQ-c30 and QLQ PR25 questionnaires. Patients reported high levels of general HRQoL comparable to a Swedish reference population. Small differences in the levels of bowel and urinary HRQoL were found in favour of the RP group. The prognostic value of comorbidity for overall and disease-free survival measured by the Charlson comorbidity index (CCI) was investigated in 611 men with localized or locally advanced PC treated with dose-dense combined HDRBT and EBRT (Study 2). Comorbidity and age were found to be the only independent predictors of overall survival (OS) with hazard ratios (HR) of 1.44 and 1.73, respectively. In contrast, clinical factors; PSA, T-stage, Gleason score and comorbidity were prognostic of Disease-free survival (DFS). Ten-year survival was retrospectively investigated in a cohort of men (n=2,387) treated with combined RT from 1998-2010 at the Karolinska University Hospital HDR-brachytherapy unit (Study 3). During a median follow-up of 10.2 years (Y) 30% of the patients died, of whom 6% from PC. The OS was 77% at ten Y and the cumulative incidence of prostate cancer specific death (PCSD) was 5%. The estimated risk of local recurrence was 1.2% in the whole cohort and the risk of prostate cancer specific failure (PCSF) was 68% at ten years. Competing risk regression was used to model the impact of risk group classification on PCSD and PCSF and was found to give prognostic information on PC specific death and failure for up to ten years. In a cross-sectional study, five-year HRQoL was explored in a sub-cohort of men from study 3 treated between 2002 and 2008 (Study 4). The aim was to evaluate long-term effects of combined RT, using the EORTC QLQ-c30 and PR 25 questionnaires. Differences in HRQoL in men treated before and after changes in the HDR-treatment procedure introduced in 2001 were also investigated using data from an earlier study at our institution. General HRQoL was high and, apart from small differences, comparable to normative data. A low level of problems was reported concerning bowel, urinary and hormone-related symptoms. However, urinary symptoms were reported more frequently than bowel problems. In the sexual domain substantial problems were present at five years. No difference in HRQoL was found between men treated before and after the introduction of the new HDR-technique, except for a reduced frequency of nocturia in favour of the present study group. In summary, combined HDRBT and EBRT is an effective treatment that provides high disease-specific and overall survival with excellent local control in men with PC but involves a risk for development of long-term urinary and sexual problems

Other-Regarding Preferences and Performance Pay – An Experiment on Incentives and Sorting

IZA Discussion paper n° 1191Variable pay not only creates a link between pay and performance but may also help firms in attracting the more productive employees (Lazear 1986, 2000). However, due to lack of natural data, empirical analyses of the relative importance of the selection and incentive effects of pay schemes are so far thin on the ground. In addition, these effects may be influenced by the nature of the relationship between the firm and its employees. This paper reports results of a laboratory experiment that analyzes the influence of other-regarding preferences on sorting and incentives. Experimental evidence shows that (i) the opportunity to switch to piece-rate increases the average level of output and its variance; (ii) there is a concentration of high skill workers in performance pay firms; (iii) however, in repeated interactions, efficiency wages coupled with reciprocity and inequality aversion reduce the attraction of performance related pay. Other-regarding preferences influence both the provision of incentives and their sorting effect