Designing incentives and performance measurement for advisors: How to make decision-makers listen to advice

Robert M. Gillenkirch (), Julia Ortner (), Sebastian Robert () and Louis Velthuis ()
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Robert M. Gillenkirch: University of Osnabrück
Julia Ortner: Johannes Gutenberg University Mainz
Sebastian Robert: Rosenheim University of Applied Sciences
Louis Velthuis: Johannes Gutenberg University Mainz

No 2304, Working Papers from Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz

Abstract: In a sequence of experiments, this study investigates how the design of an advisor's performance-dependent pay affects a decision-maker's reliance on advice. In all experiments, the decision-maker forms an initial judgment, receives advice and then makes a final judgment. The advisor's compensation is manipulated to be fixed, based on individual performance, or based on group performance. We find that performancedependent pay does not affect the decision-maker's reliance on advice unless performance measurement relates to group performance. Path model analyses show that the advisor's performance measurement affects the decision-maker's perceptions of responsibility and power, and that responsibility is the main driver of the decision-maker's cooperativeness, which mediates the relationship between performance measurement and reliance on advice. In contrast, a decision-maker's beliefs in the incentive effects of financial compensation on the quality of advice do not drive the results.

Keywords: performance measurement, incentive design, reliance on advice; goal relatedness, incentives beliefs (search for similar items in EconPapers)
JEL-codes: D83 D91 M52 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2023-05-03
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://download.uni-mainz.de/RePEc/pdf/Discussion_Paper_2304.pdf First version, 2023 (application/pdf)

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