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The Effect of Noise in a Performance Measure on Work Motivation

Author

Listed:
  • Randolph Sloof

    (University of Amsterdam)

  • C. Mirjam van Praag

    (University of Amsterdam)

Abstract

This paper reports the results of an individual real effort laboratory experiment where subjects are paid for measured performance. Measured performance equals actual performance plus noise. We compare a stable environment where the noise is small with a volatile environment where the noise is large. Subjects exert significantly more effort in the volatile environment than in the stable environment. This finding is in line with standard agency theory and contrasts a distinct element of expectancy theory; noisier performance measures do not lower work motivation. This discussion paper has resulted in a publication in Labour Economics , 17(5), 751-65.

Suggested Citation

  • Randolph Sloof & C. Mirjam van Praag, 2008. "The Effect of Noise in a Performance Measure on Work Motivation," Tinbergen Institute Discussion Papers 08-074/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20080074
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    More about this item

    Keywords

    Performance measurement; noise; work motivation; experiments; agency theory; expectancy theory;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • 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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