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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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  2. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2006. "Incentives for Managers and Inequality Among Workers: Evidence from a Firm Level Experiment," IZA Discussion Papers 2062, Institute for the Study of Labor (IZA).
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  5. 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).
  6. Pope, Devin G., 2009. "Reacting to rankings: Evidence from "America's Best Hospitals"," Journal of Health Economics, Elsevier, vol. 28(6), pages 1154-1165, December.
  7. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2012. "Team Incentives: Evidence from a Firm Level Experiment," CEPR Discussion Papers 8776, C.E.P.R. Discussion Papers.
  8. Hossain Tanjim & Morgan John, 2006. "...Plus Shipping and Handling: Revenue (Non) Equivalence in Field Experiments on eBay," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-30, January.
  9. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and taxation: theory and evidence," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2009-11, Board of Governors of the Federal Reserve System (U.S.).
  10. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2009. "Social Incentives in the Workplace," IZA Discussion Papers 4190, Institute for the Study of Labor (IZA).
  11. 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.
  12. Victor Stango & Jonathan Zinman, 2011. "Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees," NBER Working Papers 17028, National Bureau of Economic Research, Inc.
  13. Steven D. Levitt & John A. List, 2011. "Was There Really a Hawthorne Effect at the Hawthorne Plant? An Analysis of the Original Illumination Experiments," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 224-38, January.
  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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Citations

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Cited by:
  1. Margaret Meyer & Florian Ederer & Richard Holden, 2013. "Gaming and Strategic Ambiguity in Incentive Provision," Economics Series Working Papers 640, University of Oxford, Department of Economics.
  2. 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.
  3. 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.
  4. Florian Ederer & Richard Holden & Margaret Meyer, 2014. "Gaming and Strategic Opacity in Incentive Provision," Cowles Foundation Discussion Papers 1935, Cowles Foundation for Research in Economics, Yale University.
  5. 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.
  6. 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.

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