Leisure time, performance pay, and crowding-out
I study the performance effect of removing performance pay across various incentive domains. Subjects in the laboratory experiment receive performance pay in either the monetary or time domain during the first working period, after which the incentive is removed in the second working period. Removin...
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| Published in | Economics letters Vol. 231; p. 111266 |
|---|---|
| Main Author | |
| Format | Journal Article |
| Language | English |
| Published |
Elsevier B.V
01.10.2023
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| Subjects | |
| Online Access | Get full text |
| ISSN | 0165-1765 1873-7374 |
| DOI | 10.1016/j.econlet.2023.111266 |
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| Abstract | I study the performance effect of removing performance pay across various incentive domains. Subjects in the laboratory experiment receive performance pay in either the monetary or time domain during the first working period, after which the incentive is removed in the second working period. Removing performance pay decreases performance in all treatments compared to a baseline of no bonus. However, this effect is less pronounced in the time domain, where participants receive a time-off bonus that allows them to leave the laboratory earlier depending on their performance. A post-experimental questionnaire suggests reduced enjoyment of the task as a possible driver.
•Performance pay crowds-out long run performance after removing the incentive.•A time-off bonus reduces this crowding-out effect.•A change in the enjoyment of the task is a potential driver of the crowding-out effect. |
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| AbstractList | I study the performance effect of removing performance pay across various incentive domains. Subjects in the laboratory experiment receive performance pay in either the monetary or time domain during the first working period, after which the incentive is removed in the second working period. Removing performance pay decreases performance in all treatments compared to a baseline of no bonus. However, this effect is less pronounced in the time domain, where participants receive a time-off bonus that allows them to leave the laboratory earlier depending on their performance. A post-experimental questionnaire suggests reduced enjoyment of the task as a possible driver. I study the performance effect of removing performance pay across various incentive domains. Subjects in the laboratory experiment receive performance pay in either the monetary or time domain during the first working period, after which the incentive is removed in the second working period. Removing performance pay decreases performance in all treatments compared to a baseline of no bonus. However, this effect is less pronounced in the time domain, where participants receive a time-off bonus that allows them to leave the laboratory earlier depending on their performance. A post-experimental questionnaire suggests reduced enjoyment of the task as a possible driver. •Performance pay crowds-out long run performance after removing the incentive.•A time-off bonus reduces this crowding-out effect.•A change in the enjoyment of the task is a potential driver of the crowding-out effect. |
| ArticleNumber | 111266 |
| Author | Vogelsang, Timo |
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| SubjectTerms | Crowding-out economics Laboratory experiment laboratory experimentation Non-monetary reward Performance pay questionnaires Time-off |
| Title | Leisure time, performance pay, and crowding-out |
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