Framing manipulations in contests: A natural field experiment

Fuhai Hong, Tanjim Hossain () and John List

Journal of Economic Behavior & Organization, 2015, vol. 118, issue C, 372-382

Abstract: Exploiting findings that losses loom larger than gains, studies have shown that framing manipulations can increase productivity of workers. Using a natural field experiment that exogenously manipulates wage bonuses within contests in a Chinese high-tech manufacturing facility, we show that how loss aversion affects worker behavior critically depends on the incentive scheme as well as the framing manipulation. Four sets of two identical teams competed against each other to win a bonus given to the team, within a set, with the higher average hourly productivity over the week. In each set, the bonus was framed as a reward or gain for one team and as a punishment or loss for the other. Average weekly productivity was slightly higher under the loss treatment, but this increase was statistically insignificant. However, the team under the loss treatment was at least 35% more likely to win the contest. As teams’ payoffs are based on relative productivity under a contest, framing effect is much stronger in terms of relative productivity. Finally, workers seemingly responded to the bonus by increasing the quality of production as well as quantity—defect rate fell as productivity increased.

Keywords: Framing effect; Field experiment; Worker productivity; Contests; Loss aversion; Incentive contracts (search for similar items in EconPapers)
JEL-codes: C93 D03 J24 L11 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:118:y:2015:i:c:p:372-382

DOI: 10.1016/j.jebo.2015.02.014

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