The Effects of Compensation Schemes and Performance Feedback on Employee’s Self-Selection: An Experimental Investigation

Fanzheng Yang

A chapter in Experiments in Organizational Economics, 2016, vol. 19, pp 159-187 from Emerald Group Publishing Limited

Abstract: This paper is a study of how people with heterogonous individual characteristics self-select into different compensation schemes. A laboratory experiment is designed in which “workers” can join “companies” that pay according to various schemes: piece rate, revenue sharing, individual tournament, and team tournament. The main findings are: (1) Subjects with high relative performance always prefer individual tournament. (2) Risk-averse subjects are less likely to choose competitive schemes. (3) Individual tournament attracts fewer women than men, which is partially explained by gender-specific social preferences. (4) Compared to people with siblings, only children are less likely to accept any team-based schemes without information about their teammates. (5) The provision of feedback about relative performance can adjust individuals’ biased self-beliefs and then influence their self-selections.

Keywords: Compensation schemes; performance feedback; self-selection (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:rexezz:s0193-230620160000019006

DOI: 10.1108/S0193-230620160000019006

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