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The Role of Salience in Performance Schemes: Evidence from a Field Experiment

  • Englmaier, Florian


    (University of Munich)

  • Roider, Andreas


    (University of Regensburg)

  • Sunde, Uwe


    (University of Munich)

Incentive schemes affect performance and priorities of agents but, in reality, they can be complicated even for simple tasks. We analyze the effects of the salience of incentives in a team production setting where the principal has an interest in quantity and quality of output. We use data from a controlled field experiment that changed the communication of the incentive system without changing the incentive system. The results indicate that salience of incentives itself is statistically and economically important for performance. We find that higher salience of incentives for quantity increases quantity, reduces quality, and increases in-pocket income of team managers.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6448.

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Length: 31 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6448
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  1. Hossain Tanjim & Morgan John, 2006. "...Plus Shipping and Handling: Revenue (Non) Equivalence in Field Experiments on eBay," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-30, January.
  2. Oriana Bandiera & Imran Rasul & Iwan Baranky, 2011. "Team incentives: evidence from a firm level experiment," LSE Research Online Documents on Economics 58193, London School of Economics and Political Science, LSE Library.
  3. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2006. "Incentives for Managers and Inequality Among Workers: Evidence from a Firm Level Experiment," CEPR Discussion Papers 5649, C.E.P.R. Discussion Papers.
  4. Raj Chetty & Adam Looney & Kory Kroft, 2007. "Salience and Taxation: Theory and Evidence," NBER Working Papers 13330, National Bureau of Economic Research, Inc.
  5. Steven D. Levitt & John A. List, 2009. "Was there Really a Hawthorne Effect at the Hawthorne Plant? An Analysis of the Original Illumination Experiments," NBER Working Papers 15016, National Bureau of Economic Research, Inc.
  6. Thompson, Samuel B., 2011. "Simple formulas for standard errors that cluster by both firm and time," Journal of Financial Economics, Elsevier, vol. 99(1), pages 1-10, January.
  7. repec:oup:qjecon:v:121:y:2006:i:2:p:505-540 is not listed on IDEAS
  8. Nicola Lacetera & Devin G. Pope & Justin R. Sydnor, 2011. "Heuristic Thinking and Limited Attention in the Car Market," NBER Working Papers 17030, National Bureau of Economic Research, Inc.
  9. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2009. "Social Connections and Incentives in the Workplace: Evidence From Personnel Data," Econometrica, Econometric Society, vol. 77(4), pages 1047-1094, 07.
  10. Pope, Devin G., 2009. "Reacting to rankings: Evidence from "America's Best Hospitals"," Journal of Health Economics, Elsevier, vol. 28(6), pages 1154-1165, December.
  11. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2009. "Social Incentives in the Workplace," IZA Discussion Papers 4190, Institute for the Study of Labor (IZA).
  12. Tanjim Hossain & John A. List, 2009. "The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations," NBER Working Papers 15623, National Bureau of Economic Research, Inc.
  13. Victor Stango & Jonathan Zinman, 2011. "Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees," NBER Working Papers 17028, National Bureau of Economic Research, Inc.
  14. repec:oup:qjecon:v:125:y:2010:i:2:p:859-876 is not listed on IDEAS
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