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Other-Regarding Preferences and Performance Pay : An Experiment on Incentives and Sorting

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dc.creator Villeval, Marie-Claire
dc.creator Eriksson, Tor
dc.date 2004
dc.date.accessioned 2013-10-16T07:10:31Z
dc.date.available 2013-10-16T07:10:31Z
dc.date.issued 2013-10-16
dc.identifier http://hdl.handle.net/10419/20436
dc.identifier ppn:39028341X
dc.identifier.uri http://koha.mediu.edu.my:8181/xmlui/handle/10419/20436
dc.description Variable pay not only creates a link between pay and performance but may also help firms in attracting the more productive employees (Lazear 1986, 2000). However, due to lack of natural data, empirical analyses of the relative importance of the selection and incentive effects of pay schemes are so far thin on the ground. In addition, these effects may be influenced by the nature of the relationship between the firm and its employees. This paper reports results of a laboratory experiment that analyzes the influence of other-regarding preferences on sorting and incentives. Experimental evidence shows that (i) the opportunity to switch to piece-rate increases the average level of output and its variance; (ii) there is a concentration of high skill workers in performance pay firms; (iii) however, in repeated interactions, efficiency wages coupled with reciprocity and inequality aversion reduce the attraction of performance related pay. Other-regarding preferences influence both the provision of incentives and their sorting effect.
dc.language eng
dc.relation IZA Discussion paper series 1191
dc.rights http://www.econstor.eu/dspace/Nutzungsbedingungen
dc.subject M52
dc.subject J33
dc.subject J31
dc.subject C81
dc.subject C91
dc.subject ddc:330
dc.subject performance pay
dc.subject incentives
dc.subject sorting
dc.subject selection
dc.subject other-regarding preferences
dc.subject experiment
dc.subject Leistungsorientierte Vergütung
dc.subject Leistungsanreiz
dc.subject Personalauswahl
dc.subject Gerechtigkeit
dc.subject Experiment
dc.subject reciprocity
dc.title Other-Regarding Preferences and Performance Pay : An Experiment on Incentives and Sorting
dc.type doc-type:workingPaper

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