The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations
AbstractRecent discoveries in behavioral economics have led to important new insights concerning what can happen in markets. Such gains in knowledge have come primarily via laboratory experiments--a missing piece of the puzzle in many cases is parallel evidence drawn from naturally occurring field counterparts. We provide a small movement in this direction by taking advantage of a unique opportunity to work with a Chinese high-tech manufacturing facility. Our study revolves around using insights gained from one of the most influential lines of behavioral research--framing manipulations--in an attempt to increase worker productivity in the facility. Using a natural field experiment, we report several insights. For example, conditional incentives framed as both "losses" and "gains" increase productivity for both individuals and teams. In addition, teams more acutely respond to bonuses posed as losses than as comparable bonuses posed as gains. The magnitude of this framing effect is roughly 1%: that is, total team productivity is enhanced by 1% purely due to the framing manipulation. Importantly, we find that neither the framing nor the incentive effect lose their significance over time; rather, the effects are observed over the entire sample period. Moreover, we learn that repeated interaction with workers and conditionality of the bonus contract are substitutes for sustenance of incentive effects in the long run. This paper was accepted by Gérard P. Cachon, decision analysis.
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Bibliographic InfoArticle provided by INFORMS in its journal Management Science.
Volume (Year): 58 (2012)
Issue (Month): 12 (December)
framing effect; natural field experiment; worker productivity; loss aversion;
Other versions of this item:
- Tanjim Hossain & John A. List, 2009. "The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations," NBER Working Papers 15623, National Bureau of Economic Research, Inc.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
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