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The Role of Salience in Performance Schemes: Evidence from a Field Experiment

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  • Englmaier, Florian

    ()
    (University of Munich)

  • Roider, Andreas

    ()
    (University of Regensburg)

  • Sunde, Uwe

    ()
    (University of Munich)

Abstract

Incentive schemes affect performance and priorities of agents but, in reality, they can be complicated even for simple tasks. We analyze the effects of the salience of incentives in a team production setting where the principal has an interest in quantity and quality of output. We use data from a controlled field experiment that changed the communication of the incentive system without changing the incentive system. The results indicate that salience of incentives itself is statistically and economically important for performance. We find that higher salience of incentives for quantity increases quantity, reduces quality, and increases in-pocket income of team managers.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6448.

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Length: 31 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6448

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Keywords: incentives; attention; salience; communication; field experiments;

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References

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  1. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2009. "Social Incentives in the Workplace," IZA Discussion Papers 4190, Institute for the Study of Labor (IZA).
  2. Dean Karlan & Margaret McConnell & Sendhil Mullainathan & Jonathan Zinman, 2010. "Getting to the Top of Mind: How Reminders Increase Saving," NBER Working Papers 16205, National Bureau of Economic Research, Inc.
  3. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2012. "Team Incentives: Evidence from a Firm Level Experiment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8776, C.E.P.R. Discussion Papers.
  4. Tanjim Hossain & John Morgan, 2006. "...plus shipping and handling: Revenue (non) equivalence in field experiments on ebay," Natural Field Experiments 00270, The Field Experiments Website.
  5. Victor Stango & Jonathan Zinman, 2011. "Limited and varying consumer attention: evidence from shocks to the salience of bank overdraft fees," Working Papers 11-17, Federal Reserve Bank of Philadelphia.
  6. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2006. "Incentives for Managers and Inequality Among Workers: Evidence from a Firm Level Experiment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5649, C.E.P.R. Discussion Papers.
  7. Raj Chetty & Adam Looney & Kory Kroft, 2007. "Salience and Taxation: Theory and Evidence," NBER Working Papers 13330, National Bureau of Economic Research, Inc.
  8. Xavier Gabaix & David Laibson, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 121(2), pages 505-540, May.
  9. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2008. "Social Connections and Incentives in the Workplace: Evidence from Personnel Data," IZA Discussion Papers 3917, Institute for the Study of Labor (IZA).
  10. Steven D. Levitt & John A. List, 2009. "Was there Really a Hawthorne Effect at the Hawthorne Plant? An Analysis of the Original Illumination Experiments," NBER Working Papers 15016, National Bureau of Economic Research, Inc.
  11. Nicola Lacetera & Devin G. Pope & Justin R. Sydnor, 2011. "Heuristic Thinking and Limited Attention in the Car Market," NBER Working Papers 17030, National Bureau of Economic Research, Inc.
  12. Tanjim Hossain & John A. List, 2012. "The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations," Management Science, INFORMS, INFORMS, vol. 58(12), pages 2151-2167, December.
  13. Pope, Devin G., 2009. "Reacting to rankings: Evidence from "America's Best Hospitals"," Journal of Health Economics, Elsevier, Elsevier, vol. 28(6), pages 1154-1165, December.
  14. Jennifer Brown & Tanjim Hossain & John Morgan, 2010. "Shrouded Attributes and Information Suppression: Evidence from the Field," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 125(2), pages 859-876, May.
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Cited by:
  1. Florian Ederer & Richard Holden & Margaret Meyer, 2014. "Gaming and Strategic Opacity in Incentive Provision," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1935, Cowles Foundation for Research in Economics, Yale University.
  2. Jeannette Brosig-Koch & Heike Hennig-Schmidt & Nadja Kairies & Daniel Wiesen, 2013. "How to Improve Patient Care? – An Analysis of Capitation, Fee-for-Service, and Mixed Payment Schemes for Physicians," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0412, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  3. Sliwka, Dirk & Manthei, Kathrin, 2013. "Multitasking and the Benefits of Objective Performance Measurement - Evidence from a Field Experiment," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79968, Verein für Socialpolitik / German Economic Association.
  4. Ederer, Florian & Holden, Richard & Meyer, Margaret A, 2013. "Gaming and Strategic Ambiguity in Incentive Provision," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9319, C.E.P.R. Discussion Papers.
  5. Fuhai Hong & Tanjim Hossain & John A. List & Migiwa Tanaka, 2013. "Testing the Theory of Multitasking: Evidence from a Natural Field Experiment in Chinese Factories," CESifo Working Paper Series 4522, CESifo Group Munich.
  6. Fuhai Hong & Tanjim Hossain & John List & Migiwa Tanaka, 2013. "Using a natural field experiment to test the theory of multitasking," Natural Field Experiments 00388, The Field Experiments Website.

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