Performance Pay and Multidimensional Sorting - Productivity, Preferences and Gender

This paper studies the impact of incentives on worker self-selection in a controlled laboratory experiment. Subjects face the choice between a fixed and a variable payment scheme. Depending on the treatment, the variable payment is a piece rate, a tournament or a revenue-sharing scheme. We find that output is higher in the variable pay schemes (piece rate, tournament, and revenue sharing) compared to the fixed payment scheme. This difference is largely driven by productivity sorting. In addition personal attitudes such as willingness to take risks and relative self-assessment as well as gender affect the sorting decision in a systematic way. Moreover, self-reported effort is significantly higher in all variable pay conditions than in the fixed wage condition. Our lab findings are supported by an additional analysis using data from a large and representative sample. In sum, our findings underline the importance of multi-dimensional sorting, i.e., the tendency for different incentive schemes to systematically attract people with different individual characteristics

MATCHING AND EFFICIENCY IN THE BASEBALL FREE-AGENT SYSTEM: AN EXPERIMENTAL EXAMINATION

empirical methods ; resource allocation

Productivity under Group Incentives: An Experimental Study.

This paper presents an experimental examination of a variety of group incentive programs. The authors investigate simple revenue sharing and more sophisticated, target-based systems such as profit sharing or productivity gainsharing, as well as tournament-based and monitoring schemes. Their results can be characterized by three facts: (1) history matters-how a group performs in one incentive scheme depends on its history together under the scheme that preceded it; (2) relative performance schemes outperform target-based schemes; and (3) monitoring can elicit high effort from workers, but the probability of monitoring must be high and, therefore, costly. Copyright 1997 by American Economic Association.

Play To Your Strengths Managing Your Internal Labor Markets For Lasting Competitive Advantage

274hal.;vii.;23c