Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34944
Authors: 
Eriksson, Tor
Poulsen, Anders
Villeval, Marie-Claire
Year of Publication: 
2008
Series/Report no.: 
IZA Discussion Papers 3440
Abstract: 
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.
Subjects: 
Performance pay
tournament
piece rate
peer effects
information
feedback
evaluation
experiment
JEL: 
C70
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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