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Leveraging upfront payments to curb employee misbehavior: Evidence from a natural field experiment

Author

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  • List, John A.
  • Momeni, Fatemeh

Abstract

We use a natural field experiment in which we hired over 2000 workers from an online labor market to explore how upfront payment affects worker motivation and misbehavior on the job. We start with a simple theory that shows paying upfront can increase misbehavior through reducing the perceived costs of cheating, but it can decrease misbehavior through generating a gift-exchange effect. Motivated by the theory, we designed a task that provided workers with opportunities to reciprocate or misbehave. A unique aspect of our design is that we are permitted an opportunity to measure the curvature of the gift-exchange value of the upfront payment. Our results suggest paying workers upfront induces a gift-exchange effect that is concave in the share of total wage paid upfront. Moreover, the impact is strong enough to suggest that small upfront payments are a cost-effective means for an employer to curb employee misbehavior.

Suggested Citation

  • List, John A. & Momeni, Fatemeh, 2020. "Leveraging upfront payments to curb employee misbehavior: Evidence from a natural field experiment," European Economic Review, Elsevier, vol. 130(C).
    • Handle: RePEc:eee:eecrev:v:130:y:2020:i:c:s0014292120302312
    DOI: 10.1016/j.euroecorev.2020.103601
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    References listed on IDEAS

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    1. Två åtgärder som påverkar anställdas beteende
      by Niclas Berggren in Nonicoclolasos on 2020-08-03 05:22:00

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    3. Goerg, Sebastian J. & Himmler, Oliver & König, Tobias, 2024. "Norm violations and behavioral spillovers—Evidence from the lab and the field," European Economic Review, Elsevier, vol. 166(C).
    4. Mujcic, Redzo & Powdthavee, Nattavudh, 2022. "How Do Humans Respond to Huge Financial Losses?," IZA Discussion Papers 15536, Institute of Labor Economics (IZA).

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