Feedback and Incentives: Experimental Evidence

Tor Viking Eriksson; Anders Poulsen; Marie Claire Villeval

doi:10.1016/j.labeco.2009.08.006

Feedback and Incentives: Experimental Evidence

Tor Viking Eriksson, Anders Poulsen, Marie Claire Villeval

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaper › Journal article › Research › peer-review

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Abstract

This paper experimentally investigates the impact of different pay schemes and relative performance feedback policies on employee effort. We explore three feedback rules: no feedback on relative performance, feedback given halfway through the production period, and continuously updated feedback. We use two pay schemes, a piece rate and a tournament. We find that overall feedback does not improve performance. In contrast to the piece-rate pay scheme there is some evidence of positive peer effects in tournaments since the underdogs almost never quit the competition even when lagging significantly behind, and front runners do not slack off. But in both pay schemes relative performance feedback reduces the quality of the low performers' work; we refer to this as a "negative quality peer effect".

Original language	English
Journal	Labour Economics
Volume	16
Issue	6
Pages (from-to)	679-688
ISSN	0927-5371
DOIs	https://doi.org/10.1016/j.labeco.2009.08.006
Publication status	Published - 2009

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10.1016/j.labeco.2009.08.006

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Cite this

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title = "Feedback and Incentives: Experimental Evidence",

abstract = "This paper experimentally investigates the impact of different pay schemes and relative performance feedback policies on employee effort. We explore three feedback rules: no feedback on relative performance, feedback given halfway through the production period, and continuously updated feedback. We use two pay schemes, a piece rate and a tournament. We find that overall feedback does not improve performance. In contrast to the piece-rate pay scheme there is some evidence of positive peer effects in tournaments since the underdogs almost never quit the competition even when lagging significantly behind, and front runners do not slack off. But in both pay schemes relative performance feedback reduces the quality of the low performers' work; we refer to this as a {"}negative quality peer effect{"}.",

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AU - Poulsen, Anders

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AB - This paper experimentally investigates the impact of different pay schemes and relative performance feedback policies on employee effort. We explore three feedback rules: no feedback on relative performance, feedback given halfway through the production period, and continuously updated feedback. We use two pay schemes, a piece rate and a tournament. We find that overall feedback does not improve performance. In contrast to the piece-rate pay scheme there is some evidence of positive peer effects in tournaments since the underdogs almost never quit the competition even when lagging significantly behind, and front runners do not slack off. But in both pay schemes relative performance feedback reduces the quality of the low performers' work; we refer to this as a "negative quality peer effect".

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DO - 10.1016/j.labeco.2009.08.006

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Feedback and Incentives: Experimental Evidence

Abstract

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