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Are You Paying Your Employees to Cheat? An Experimental Investigation

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  • Cadsby C. Bram

    ()
    (University of Guelph)

  • Song Fei

    ()
    (Ryerson University)

  • Tapon Francis

    ()
    (University of Guelph)

Abstract

We compare, through a laboratory experiment using salient financial incentives, misrepresentations of performance under target-based compensation with those under both a linear piece-rate and a tournament-based bonus system. An anagram game was employed as the experimental task. Results show that productivity was similar and statistically indistinguishable under the three schemes. In contrast, whether one considers the number of overclaimed words, the number of work/pay periods in which overclaims occur, or the number of participants making an overclaim at least once, target-based compensation produced significantly more cheating than either of the other two systems. While earlier research has compared cheating under target-based compensation with cheating under non-performance-based compensation, which offers no financial incentive to cheat, this is the first study that compares cheating under target-based schemes to cheating under other performance-based schemes. The results suggest that cheating as a response to incentives can be mitigated without giving up performance pay altogether.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 10 (2010)
Issue (Month): 1 (April)
Pages: 1-32

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Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:35

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Cited by:
  1. Belot, Michèle & Schröder, Marina, 2013. "Sloppy work, lies and theft: A novel experimental design to study counterproductive behaviour," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 233-238.
  2. Seeun Jung & Kenneth Houngbedji, 2014. "Shirking, Monitoring, and Risk Aversion," PSE Working Papers halshs-00965532, HAL.
  3. Josse Delfgaauw & Robert Dur & Arjan Non & Willem Verbeke, 2010. "Dynamic Incentive Effects of Relative Performance Pay: A Field Experiment," Tinbergen Institute Discussion Papers 10-124/1, Tinbergen Institute, revised 27 Sep 2011.
  4. Gill, David & Prowse, Victoria & Vlassopoulos, Michael, 2013. "Cheating in the workplace: An experimental study of the impact of bonuses and productivity," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 120-134.
  5. Josse Delfgaauw & Robert Dur & Arjan Non & Willem Verbeke, 2010. "Dynamic Incentive Effects of Relative Performance Pay: A Field Experiment," Tinbergen Institute Discussion Papers 10-124/1, Tinbergen Institute, revised 27 Sep 2011.
  6. Welsh, David T. & Ordóñez, Lisa D., 2014. "The dark side of consecutive high performance goals: Linking goal setting, depletion, and unethical behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 123(2), pages 79-89.
  7. Conrads, Julian & Irlenbusch, Bernd & Rilke, Rainer Michael & Schielke, Anne & Walkowitz, Gari, 2014. "Honesty in tournaments," Economics Letters, Elsevier, vol. 123(1), pages 90-93.
  8. Danilov, Anastasia & Biemann, Torsten & Kring, Thorn & Sliwka, Dirk, 2013. "The dark side of team incentives: Experimental evidence on advice quality from financial service professionals," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 266-272.
  9. Conrads, Julian & Irlenbusch, Bernd & Rilke, Rainer Michael & Walkowitz, Gari, 2013. "Lying and team incentives," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 1-7.

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