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Feedback and Incentives: Experimental Evidence

Research output: Working paperResearch

  • Tor Viking Eriksson
  • Anders Poulsen, University of East Anglia, United Kingdom
  • Marie-Claire Villeval, University of Lyon, CNRS-GATE, France
  • Department of Economics
  • Center for Corporate Performance (CCP)
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.
Original languageEnglish
Place of publicationBonn
PublisherIZA. Institute for the Study of Labor / Forschungsinstitut zur Zukunft der Arbeit
Number of pages42
Publication statusPublished - 2008

    Research areas

  • Performance pay , , i,, Tournament, Piece rate, Peer effects, Information, Feedback

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ID: 41327