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On the merit of equal pay: Performance manipulation and incentive setting

Brice Corgnet (), Ludivine Martin, Peguy Ndodjang and Angela Sutan

European Economic Review, 2019, vol. 113, issue C, 23-45

Abstract: Work performance is often difficult to assess thus leaving room for manipulation of commonly-used metrics. We created a laboratory workplace in which we can precisely assess both work performance along with manipulation activities. Using two independent experiments we show that, whenever pay for performance is used, manipulation is pervasive leading to both a waste of organizational resources and a weakening of incentives. By contrast, paying organizational members equally effectively deters manipulation attempts leading to higher organizational production.

Keywords: Influence activities; Incentive theory; Theory of the firm; Organizational economics (search for similar items in EconPapers)
JEL-codes: C91 D23 D86 M52 (search for similar items in EconPapers)
Date: 2019
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European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

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