Working paper
Ambiguity in Performance Pay: An Online Experiment
SSRN
05/23/2013
DOI: 10.2139/ssrn.2268633
Abstract
Many incentive contracts are inherently ambiguous, lacking an explicit mapping between performance and pay. Using an online labor market, Amazon Mechanical Turk, we study the effect of ambiguous incentives on willingness to accept contracts to do a real-effort task, the probability of completing the task, and performance at the task. Even modest levels of ambiguity about the relationship between performance and pay are sufficient to eliminate the positive selection effect associated with piece rates, as high ability individuals are no more likely than low ability individuals to accept a contract. Piece rate contracts significantly improve performance relative to fixed wages, primarily due to selection, but this positive effect is not present with ambiguous incentive contracts. Modest levels of ambiguity reduce the probability that subjects accept an incentive contract and all types of ambiguous incentive contracts increase the probability of quitting after having accepted an incentive contract. Information about individual ability at the task reduces the probability that subjects choose and complete the task.
Details
- Title: Subtitle
- Ambiguity in Performance Pay: An Online Experiment
- Creators
- David J Cooper - Florida State UniversityDavid Johnson - Florida State University
- Resource Type
- Working paper
- Publisher
- SSRN
- DOI
- 10.2139/ssrn.2268633
- Number of pages
- 50 pages
- Language
- English
- Date posted
- 05/23/2013
- Date updated
- 08/31/2016
- Academic Unit
- Economics
- Record Identifier
- 9984420929202771
Metrics
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