Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85000
Authors: 
Goerg, Sebastian J.
Kube, Sebastian
Year of Publication: 
2012
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods 2012/19
Abstract: 
In a randomized field experiment, we investigate the connection between work goals, monetary incentives, and work performance. Employees are observed in a natural work environment where they have to do a simple, but effort-intense task. Output is perfectly observable and workers are paid for performance. While a regular piece-rate contract serves as a benchmark, in some treatments workers are paid a bonus conditional on reaching a pre-specified goal. We observe that the use of personal work goals leads to a significant output increase. The positive effect of goals not only prevails if they are self-chosen by the workers, but also if goals are set exogenously by the principal - although in the latter case, the exact size of the goal plays a crucial role. Strikingly, the positive effect of self-chosen goals persists even if the goal is not backed up by monetary incentives. We propose a novel incentive contract where - through the choice of a personal work goal - workers themselves determine the risk and the size of their bonus payment at the same time.
Subjects: 
Goal setting
monetary incentives
bonus payments
pay-for-performance contracts
workplace behavior
field experiment
JEL: 
A12
C93
D01
D03
D24
J24
J33
M52
Document Type: 
Working Paper

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