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Performance-pay, sorting and social motivation

Variable pay links pay and performance but may also help firms to attract more productive employees. Our experiment investigates the impact of performance-pay on both incentives and sorting and analyzes the influence of repeated interactions between firms and employees on these effects. We show that...

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Published in:	Journal of economic behavior & organization 2008-11, Vol.68 (2), p.412-421
Main Authors:	Eriksson, Tor, Villeval, Marie Claire
Format:	Article
Language:	English
Subjects:	Attraction Businesses Efficiency wages Employees Experiment Impact analysis Incentives Labour productivity Motivation Organizational behavior Pay Pay for performance Performance-pay Performance-pay Incentives Sorting Social motivation Experiment Reputation Skills Social motivation Sorting Studies Variance Wages Work incentives
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container_end_page	421
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container_title	Journal of economic behavior & organization
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creator	Eriksson, Tor Villeval, Marie Claire
description	Variable pay links pay and performance but may also help firms to attract more productive employees. Our experiment investigates the impact of performance-pay on both incentives and sorting and analyzes the influence of repeated interactions between firms and employees on these effects. We show that (i) the opportunity to switch from a fixed wage to variable pay scheme increases the average effort level and its variance, and (ii) high skill employees concentrate under the variable pay scheme; (iii) however, in repeated interactions, efficiency wages reduce the attraction of performance-pay. Social motivation and reputation influence both the provision of incentives and their sorting effect.
doi_str_mv	10.1016/j.jebo.2007.10.003
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source	Applied Social Sciences Index & Abstracts (ASSIA); International Bibliography of the Social Sciences (IBSS); ScienceDirect Freedom Collection
subjects	Attraction Businesses Efficiency wages Employees Experiment Impact analysis Incentives Labour productivity Motivation Organizational behavior Pay Pay for performance Performance-pay Performance-pay Incentives Sorting Social motivation Experiment Reputation Skills Social motivation Sorting Studies Variance Wages Work incentives
title	Performance-pay, sorting and social motivation
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