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Feedback and incentives: Experimental evidence

Tor Eriksson (), Anders Poulsen () and Marie Claire Villeval ()

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Abstract: This paper experimentally investigates the impact of different pay schemes and relative performance feedback policies on employee effort. We explore three feedback rules: No feedback on relative performance, feedback given halfway through the production period, and continuously updated feedback. We use two pay schemes, a piece rate and a tournament. We find that overall feedback does not improve performance. In contrast to the piece-rate pay scheme there is in tournaments some evidence of positive peer effects in tournaments since the underdogs almost never quit the competition even when lagging significantly behind, and front runners do not slack off. But in both pay schemes relative performance feedback reduces the quality of the low performers' work; we refer to this as a "negative quality peer effect".

Keywords: Tournament; Piece rate; Peer effects; Feedback; Evaluation; Experiment (search for similar items in EconPapers)
Date: 2009
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00451557
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Published in Labour Economics, Elsevier, 2009, 16 (6), pp. 679-688

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Journal Article: Feedback and incentives: Experimental evidence (2009) Downloads
Working Paper: Feedback and Incentives: Experimental Evidence (2008) Downloads
Working Paper: Feedback and Incentives: Experimental Evidence (2008) Downloads
Working Paper: Feedback and Incentives: Experimental Evidence (2008) Downloads
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