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The effect of noise in a performance measure on work motivation: A real effort laboratory experiment

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  • Sloof, Randolph
  • van Praag, C. Mirjam

Abstract

This paper reports the results of an individual real effort laboratory experiment where subjects are paid for measured performance. Measured performance equals actual performance plus noise. We compare a stable environment where the noise is small with a volatile environment where the noise is large. Subjects exert significantly more effort in the volatile environment than in the stable environment. This finding is in line with standard agency theory and contrasts the intuitive idea captured by a distinct element of expectancy theory that noisier performance measures would lower work motivation.

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  • Sloof, Randolph & van Praag, C. Mirjam, 2010. "The effect of noise in a performance measure on work motivation: A real effort laboratory experiment," Labour Economics, Elsevier, vol. 17(5), pages 751-765, October.
  • Handle: RePEc:eee:labeco:v:17:y:2010:i:5:p:751-765
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