Performance Pay and Multidimensional Sorting: Productivity, Preferences, and Gender
- (pp. 556-90)
Abstract
This paper studies the impact of incentives on worker self-selection in a controlled laboratory experiment. Subjects face the choice between a fixed and a variable payment scheme. Depending on the treatment, the variable payment is a piece rate, a tournament, or a revenue-sharing scheme. We find that output is higher in the variable-payment schemes compared to the fixed-payment scheme. This difference is largely driven by productivity sorting. In addition, different incentive schemes systematically attract individuals with different attitudes, such as willingness to take risks and relative self-assessment as well as gender, which underlines the importance of multidimensional sorting. (JEL C91, D81, D82, J16, J31)Citation
Dohmen, Thomas, and Armin Falk. 2011. "Performance Pay and Multidimensional Sorting: Productivity, Preferences, and Gender." American Economic Review, 101 (2): 556-90. DOI: 10.1257/aer.101.2.556Additional Materials
JEL Classification
- C91 Design of Experiments: Laboratory, Individual
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D82 Asymmetric and Private Information
- J16 Economics of Gender; Non-labor Discrimination
- J31 Wage Level and Structure; Wage Differentials