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

Author

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  • Brice Corgnet

    (EM - emlyon business school, GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

  • Ludivine Martin

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, LISER - Luxembourg Institute of Socio-Economic Research)

  • Peguy Ndodjang

    (UPVD - Université de Perpignan Via Domitia)

  • Angela Sutan

    (BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC))

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 halshs-02393577, HAL.
  • Handle: RePEc:hal:journl:halshs-02393577
    DOI: 10.1016/j.euroecorev.2018.12.006
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-02393577
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    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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