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On the merit of equal pay : Performance manipulation and incentive setting

Author

Listed:
  • Brice Corgnet

    (EM - EMLyon Business School, GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - EM - EMLyon Business School - CNRS - Centre National de la Recherche Scientifique)

  • Ludivine Martin

    (LISER - Luxembourg Institute of Socio-Economic Research, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Peguy Ndodjang

    (UPVD - Université de Perpignan Via Domitia)

  • Angela Sutan

    (BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC), CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC))

Abstract

Work performance is often difficult to assess thus leaving room for manipulation of commonly-used metrics. We created a laboratory workplace in which we can precisely assess both work performance along with manipulation activities. Using two independent experiments we show that, whenever pay for performance is used, manipulation is pervasive leading to both a waste of organizational resources and a weakening of incentives. By contrast, paying organizational members equally effectively deters manipulation attempts leading to higher organizational production.

Suggested Citation

  • Brice Corgnet & Ludivine Martin & Peguy Ndodjang & Angela Sutan, 2019. "On the merit of equal pay : Performance manipulation and incentive setting," Post-Print hal-02312289, HAL.
    • Handle: RePEc:hal:journl:hal-02312289
    DOI: 10.1016/j.euroecorev.2018.12.006
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    Citations

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    Cited by:

    1. Simon Dato & Eberhard Feess & Petra Nieken, 2022. "Lying in Competitive Environments: A Clean Identification of Behavioral Impacts," CESifo Working Paper Series 9861, CESifo.
    2. Werner, Peter, 2023. "Wage negotiations and strategic responses to transparency," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 161-175.
    3. Yuan, Sai & Zhou, Ran & Li, Mengna & Lv, Chengchao, 2023. "Investigating the influence of digital technology application on employee compensation," Technological Forecasting and Social Change, Elsevier, vol. 195(C).
    4. Dato, Simon & Feess, Eberhard & Nieken, Petra, 2024. "Lying in competitive environments: Identifying behavioral impacts," European Economic Review, Elsevier, vol. 170(C).
    5. Awaya, Yu & Do, Jihwan, 2022. "Incentives under equal-pay constraint and subjective peer evaluation," Games and Economic Behavior, Elsevier, vol. 135(C), pages 41-59.

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