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Multi-Rater Performance Evaluations and Incentives

Author

Listed:
  • Ockenfels, Axel

    (University of Cologne)

  • Sliwka, Dirk

    (University of Cologne)

  • Werner, Peter

    (Maastricht University)

Abstract

We compare evaluations of employee performance by individuals and groups of supervisors, analyzing a formal model and running a laboratory experiment. The model predicts that multi-rater evaluations are more precise than single-rater evaluations if groups rationally aggregate their signals about employee performance. Our controlled laboratory experiment confirms this prediction and finds evidence that this can indeed be attributed to accurate information processing in the group. Moreover, when employee compensation depends on evaluations, multi-rater evaluations tend to be associated with higher performance.

Suggested Citation

  • Ockenfels, Axel & Sliwka, Dirk & Werner, Peter, 2024. "Multi-Rater Performance Evaluations and Incentives," IZA Discussion Papers 16812, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp16812
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    References listed on IDEAS

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    More about this item

    Keywords

    performance appraisal; calibration panels; group decision-making; real effort; incentives;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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