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Title:Differentiation and performance: An empirical investigation on the incentive effects of bonus plans PDF Logo
Authors:Kampkötter, Patrick
Sliwka, Dirk
Issue Date:2011
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6070
Abstract:It is often claimed that supervisors do not differentiate enough between high and low performing employees when evaluating performance. The purpose of this paper is to study the incentive effects of this behavior empirically. We first show in a simple model that the perceived degree of past differentiation affects future incentives. We then study the impact of differentiation empirically with a large panel data set spanning many firms in one industry. On average, stronger differentiation has a substantial positive effect on performance. This effect is larger on higher hierarchical levels. But differentiation may become harmful at the lowest levels.
Subjects:bonus payments
differentiation
subjective performance evaluation
incentives
JEL:M52
D23
Persistent Identifier of the first edition:urn:nbn:de:101:1-201111072844
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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