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On the merit of equal pay : Performance manipulation and incentive setting

Author

Listed:
  • Brice Corgnet

    (EM - EMLyon Business School)

  • Ludivine Martin
  • Peguy Ndodjang
  • Angela Sutan

Abstract

Work performance is often difficult to assess thus leaving room for manipulation of commonly-used metrics. We created a laboratory workplace in which we can precisely assess both work performance along with manipulation activities. Using two independent experiments we show that, whenever pay for performance is used, manipulation is pervasive leading to both a waste of organizational resources and a weakening of incentives. By contrast, paying organizational members equally effectively deters manipulation attempts leading to higher organizational production.

Suggested Citation

  • Brice Corgnet & Ludivine Martin & Peguy Ndodjang & Angela Sutan, 2019. "On the merit of equal pay : Performance manipulation and incentive setting," Post-Print hal-02312289, HAL.
  • Handle: RePEc:hal:journl:hal-02312289
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    More about this item

    Keywords

    Influence activities; Incentive theory; Theory of the firm; Organizational economics;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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