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The Effects of Compensation Schemes and Performance Feedback on Employee’s Self-Selection: An Experimental Investigation

In: Experiments in Organizational Economics

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  • Fanzheng Yang

Abstract

This paper is a study of how people with heterogonous individual characteristics self-select into different compensation schemes. A laboratory experiment is designed in which “workers” can join “companies” that pay according to various schemes: piece rate, revenue sharing, individual tournament, and team tournament. The main findings are: (1) Subjects with high relative performance always prefer individual tournament. (2) Risk-averse subjects are less likely to choose competitive schemes. (3) Individual tournament attracts fewer women than men, which is partially explained by gender-specific social preferences. (4) Compared to people with siblings, only children are less likely to accept any team-based schemes without information about their teammates. (5) The provision of feedback about relative performance can adjust individuals’ biased self-beliefs and then influence their self-selections.

Suggested Citation

  • Fanzheng Yang, 2016. "The Effects of Compensation Schemes and Performance Feedback on Employee’s Self-Selection: An Experimental Investigation," Research in Experimental Economics, in: Experiments in Organizational Economics, volume 19, pages 159-187, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rexezz:s0193-230620160000019006
    DOI: 10.1108/S0193-230620160000019006
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    Cited by:

    1. Ipik Permana & Haryo Bharoto, 2021. "Remuneration to improve employee performance at waled regional hospital, Cirebon regency," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(7), pages 163-169, October.

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