Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265975 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9940
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper reports results of two controlled experiments on the behavioural effects of relative performance information (RPI) in different organizational structures. Our baseline study 1 focuses on a centralized organizational structure where employees are exogenously assigned to either a high-performing or a low-performing peer group. We find that RPI boosts performances when employees are assigned to the low-performing group. In contrast, when assigned to the high-performing group, our results point to a discouragement effect of RPI that can be attributed to low-performers. In study 2, we show that this or similarly undesired effects do not play a crucial role under a decentralized organizational structure where employees can self-select. In fact, we demonstrate that RPI especially induces employees with a relatively low performance to voluntarily choose the high-performing group. Analyzing subsequent performances suggests that providing self-selection options allows employees to use the high-performing group as a self-set target to spur motivation.
Subjects: 
peer groups
self-selection
reference points
relative performance information
JEL: 
C91
D83
D91
M52
Document Type: 
Working Paper
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