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Incentive Systems in a Real Effort Experiment

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Author Info

  • Frans van Dijk

    (CREED, University of Amsterdam)

  • Joep Sonnemans

    ()
    (CREED, University of Amsterdam)

  • Frans van Winden

    ()
    (CREED, University of Amsterdam)

Abstract

In the reported experiment different payment schemes are examined on theirincentive effects. Payment based on individual, team and relative performance are compared. Subjects conducted computerized tasks that required substantial effort. The results show that individual and team payment induced the same effort levels. In team production free-riding occurred, but it was compensated by many subjects providing more effort than in case of individual pay. Effort was higher, but more variable in tournaments, while in case of varying abilities workers with relatively low ability worked very hard and drove up effort of the others. Finally, attitudes towards work and other workers differed strongly between conditions. This discussion paper has led to a publication in the European Economic Review 2001, 45(2), 187-214.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 98-023/1.

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Date of creation: 04 Mar 1998
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Handle: RePEc:dgr:uvatin:19980023

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Web page: http://www.tinbergen.nl

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Keywords: Payment schemes; experiment;

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References

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  1. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1987. "Asymmetric Tournaments, Equal Opportunity Laws and Affirmative Action: Some Experimental Results," Working Papers, C.V. Starr Center for Applied Economics, New York University 87-33, C.V. Starr Center for Applied Economics, New York University.
  2. Edward P. Lazear, 1996. "Performance Pay and Productivity," NBER Working Papers 5672, National Bureau of Economic Research, Inc.
  3. Pingle, Mark, 1997. "Submitting to authority: Its effect on decision-making," Journal of Economic Psychology, Elsevier, Elsevier, vol. 18(1), pages 45-68, February.
  4. Knoeber, Charles R & Thurman, Walter N, 1994. "Testing the Theory of Tournaments: An Empirical Analysis of Broiler Production," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 12(2), pages 155-79, April.
  5. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1987. "Tournaments and Piece Rates: An Experimental Study," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 95(1), pages 1-33, February.
  6. Nalbantian, Haig R & Schotter, Andrew, 1997. "Productivity under Group Incentives: An Experimental Study," American Economic Review, American Economic Association, American Economic Association, vol. 87(3), pages 314-41, June.
  7. Georg Kirchsteiger & Ernst Fehr & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," ULB Institutional Repository 2013/5927, ULB -- Universite Libre de Bruxelles.
  8. Pingle, Mark, 1995. "Imitation versus rationality: An experimental perspective on decision making," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 24(2), pages 281-315.
  9. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers, Rochester, Business - Managerial Economics Research Center 90-07, Rochester, Business - Managerial Economics Research Center.
  10. Canice Prendergast, 1996. "What Happens Within Firms? A Survey of Empirical Evidence on Compensation Policies," NBER Working Papers 5802, National Bureau of Economic Research, Inc.
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