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Using Behavioral Economics to Curb Workplace Misbehaviors: Evidence from a Natural Field Experiment

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Listed:
  • Jeffrey Flory
  • Andreas Leibbrandt
  • John List

Abstract

Workplace misbehaviors are often governed by explicit monitoring and strict punishment. Such enforcement activities can serve to lessen worker productivity and harm worker morale. We take a different approach to curbing worker misbehaviour - bonuses. Examining more than 6500 donor phone calls across more than 80 workers, we use a natural field experiment to investigate how different wage contracts influence workers' propensity to break workplace rules in harmful ways. Our findings show that even though standard relative performance pay contracts, relative to a fixed wage scheme, increase productivity, they have a dark side: they cause considerable cheating and sabotage of co-workers. Yet, even in such environments, by including an unexpected bonus, the employer can substantially curb worker misbehavior. In this manner, our findings reveal how employers can effectively leverage bonuses to eliminate undesired behaviors induced by performance pay contracts.

Suggested Citation

  • Jeffrey Flory & Andreas Leibbrandt & John List, 2017. "Using Behavioral Economics to Curb Workplace Misbehaviors: Evidence from a Natural Field Experiment," Natural Field Experiments 00617, The Field Experiments Website.
  • Handle: RePEc:feb:natura:00617
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    1. Using Behavioral Economics to Curb Workplace Misbehaviors: Evidence from a Natural Field Experiment
      by maximorossi in NEP-LTV blog on 2018-02-20 19:25:47

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