Narratives as a Persuasion Tool in Performance Appraisals

We study how workers use luck-based narratives to explain noisy performance signals and persuade managers of their higher performance in a tournament setting. In an experiment, workers were rewarded either for accurately estimating their performance relative to a sample of past workers, for persuading a manager that they outperformed their rival, or for achieving either of these goals. Results show that workers were most likely to use self-serving narratives, attributing signals of lower performance to bad luck when these narratives aimed only at persuading managers. This tendency diminished when introducing incentives for accuracy. Narratives successfully influenced managers’ bonus allocation decisions, but did not change workers’ beliefs, suggesting that workers were not fooled by their own narratives when trying to persuade managers.