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Testing the Theory of Multitasking: Evidence from a Natural Field Experiment in Chinese Factories

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  • Fuhai Hong
  • Tanjim Hossain
  • John List
  • Migiwa Tanaka

Abstract

Using a natural field experiment with factory workers where we introduce a quantity-based performance-pay scheme in addition to their base salary, we quantify the impact of one-dimensional monetary incentives on both incentivized (quantity) and non-incentivized (quality) dimensions of output. While the management typically observes only quantity, we also observe quality by hiring quality-inspectors unbeknownst to the workers. While some workers receive a flat-rate base salary, others receive a piece-rate base salary. We find sharp evidence that workers under a flat-rate base salary trade off quality for quantity. Interestingly, this quantity-quality trade-off is statistically insignificant for workers under a piece-rate base salary. This variation in the treatment effect is consistent with a simple theoretical model that predicts that when agents are already incented at the margin, the quantity-quality trade-off resulting from additional incentives will be less prominent.

Suggested Citation

  • Fuhai Hong & Tanjim Hossain & John List & Migiwa Tanaka, 2017. "Testing the Theory of Multitasking: Evidence from a Natural Field Experiment in Chinese Factories," Natural Field Experiments 00609, The Field Experiments Website.
    • Handle: RePEc:feb:natura:00609
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    References listed on IDEAS

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    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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