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Anatomy of a Contract Change


  • Rajshri Jayaraman
  • Debraj Ray
  • Francis de Vericourt


We study a contract change for tea pluckers on an Indian plantation, with a higher government-stipulated baseline wage. Incentive piece rates were lowered or kept unchanged. Yet, in the following month, output increased by 20–80%. This response contradicts the standard model and several variants, is only partly explicable by greater supervision, and appears to be “behavioral.” But in subsequent months, the increase is comprehensively reversed. Though not an unequivocal indictment of “behavioral” models, these findings suggest that non-standard responses may be ephemeral, and should ideally be tracked over an extended period of time.

Suggested Citation

  • Rajshri Jayaraman & Debraj Ray & Francis de Vericourt, 2014. "Anatomy of a Contract Change," NBER Working Papers 19849, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19849
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    References listed on IDEAS

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    Cited by:

    1. Englmaier, Florian & Grimm, Stefan & Schindler, David & Schudy, Simeon, 2018. "The Effect of Incentives in Non-Routine Analytical Team Tasks - Evidence From a Field Experiment," Rationality and Competition Discussion Paper Series 71, CRC TRR 190 Rationality and Competition.
    2. de Quidt, Jonathan, 2014. "Your loss is my gain: a recruitment experiment with framed incentives," LSE Research Online Documents on Economics 58208, London School of Economics and Political Science, LSE Library.

    More about this item

    JEL classification:

    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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