Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94163
Authors: 
Dohmen, Thomas
Falk, Armin
Year of Publication: 
2011
Series/Report no.: 
SFB/TR 15 Discussion Paper 360
Abstract: 
This paper studies the impact of incentives on worker self-selection in a controlled laboratory experiment. Subjects face the choice between a fixed and a variable payment scheme. Depending on the treatment, the variable payment is a piece rate, a tournament or a revenue-sharing scheme. We find that output is higher in the variable pay schemes (piece rate, tournament, and revenue sharing) compared to the fixed payment scheme. This difference is largely driven by productivity sorting. In addition personal attitudes such as willingness to take risks and relative self-assessment as well as gender affect the sorting decision in a systematic way. Moreover, self-reported effort is significantly higher in all variable pay conditions than in the fixed wage condition. Our lab findings are supported by an additional analysis using data from a large and representative sample. In sum, our findings underline the importance of multi-dimensional sorting, i.e., the tendency for different incentive schemes to systematically attract people with different individual characteristics.
Subjects: 
Sorting
Incentives
Piece Rates
Tournament
Revenue-Sharing
Risk Preferences
Social Preferences
Gender
Experiment
Field Evidence
JEL: 
J3
M52
C91
D81
J16
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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