Narratives as a Persuasion Tool in Performance Appraisals

We investigated whether individuals use narratives about the role of luck to influence decision-makers’ interpretation of noisy performance signals in a tournament setting. In an experiment, pairs of workers were either rewarded for accurately estimating their relative performance (Control treatment), persuading a manager they outperformed their competitor (Strategic treatment), or both (Trade-Off treatment). Results show that workers were most likely to adopt self-serving narratives attributing signals of lower performance to bad luck in the Strategic treatment. This tendency was reduced in the Trade-Off treatment where accuracy incentives were introduced. While self-serving narratives influenced managers’ decisions regarding the allocation of the winner’s prize, they did not change workers’ beliefs, suggesting that the narratives did not deceive them.