Self-Selection and the Power of Incentive Schemes: An Experimental Study
AbstractWe examine how self-selection of workers into firms depends on the power of the firms' incentive schemes and how it affects the performance of firms that increase the power of the incentive schemes. In a laboratory experiment, we let subjects choose between (low-powered) team incentives and (high-powered) individual incentives. We observe that subjects exhibiting high trust or reciprocity in the trust game are more likely to choose team incentives. When exposed to individual incentives, workers who chose team incentives perform worse if both the unobservable interdependency between workers and their incentive to cooperate under team incentives are high.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 10-074/1.
Date of creation: 29 Jul 2010
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Incentive scheme; Self-selection; Laboratory experiment;
Other versions of this item:
- Jana Vyrastekova & Sander Onderstal & Pierre Koning, 2012. "Self-selection and the power of incentive schemes: an experimental study," Applied Economics, Taylor & Francis Journals, vol. 44(32), pages 4211-4219, November.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-26 (All new papers)
- NEP-CBE-2011-02-26 (Cognitive & Behavioural Economics)
- NEP-CTA-2011-02-26 (Contract Theory & Applications)
- NEP-EXP-2011-02-26 (Experimental Economics)
- NEP-HRM-2011-02-26 (Human Capital & Human Resource Management)
- NEP-LAB-2011-02-26 (Labour Economics)
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