Performance pay, sorting and social motivation

Eriksson, Tor; Villeval, Marie Claire

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@article{ Eriksson2008,
 title = {Performance pay, sorting and social motivation},
 author = {Eriksson, Tor and Villeval, Marie Claire},
 journal = {Journal of Economic Behavior & Organization},
 number = {2},
 pages = {412-421},
 volume = {68},
 year = {2008},
 doi = {https://doi.org/10.1016/j.jebo.2007.10.003},
 urn = {https://nbn-resolving.org/urn:nbn:de:0168-ssoar-268278},
 abstract = {"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." [author's abstract]},
}