Examining the Tradeoff Between Fixed Pay and Performance-Related Pay: A Choice Experiment Approach

Junyi Shen, Kazuhito Ogawa () and Hiromasa Takahashi

Review of Economic Analysis, 2014, vol. 6, issue 2, 119-131

Abstract: Previous investigations on performance-related pay have mainly analyzed its relationships with earnings, productivity, and job satisfaction. Less attention has been devoted to the investigations of individuals’ preferences for the performance-related payment system per se and consequently the tradeoff between fixed pay and performance-related pay. In this paper, we first use a choice experiment approach to investigate the tradeoff between fixed pay and performance-related pay, and then link the tradeoff for each individual with their risk preferences. Our main results indicate that individuals’ preferences for the payment system per se and the magnitude of tradeoffs between fixed pay and performance pay are different according to their risk preferences.

Keywords: Fixed pay; Performance-related pay; Choice experiment; Risk preference (search for similar items in EconPapers)
JEL-codes: C35 J33 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Examining the Tradeoff between Fixed Pay and Performance-related Pay: A Choice Experiment Approach (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ren:journl:v:6:y:2014:i:2:p:119-131

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