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Do Performance Ranks Increase Productivity? Evidence from a Field Experiment

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  • Ashraf, Anik

    (LMU Munich)

Abstract

Can a firm increase its workers' eff ort by introducing competition through performance-based ranking? On one hand such ranking can increase eff ort because of individuals' desire for status from high ranks, but on the other, it can demotivate them or make them wary of outperforming peers. This paper disentangles the e ffects of demotivation, social conformity, and status associated with ranking through a randomized experiment at a Bangladeshi sweater factory. Treated workers receive monthly information on their relative performance either in private or in public. Both a simple theoretical framework and empirical evidence from the field show that workers' intrinsic desire to be good at work induces privately ranked workers to increase eff ort upon receiving positive feedback, but they get demotivated and decrease e ffort upon receiving negative feedback. Public ranking lead to lower net eff ort relative to private ranking because of a strong preference not to outperform friends. The negative e ffects from demotivation and social conformity may explain why the existing literature finds mixed evidence of impact of ranking workers.

Suggested Citation

  • Ashraf, Anik, 2019. "Do Performance Ranks Increase Productivity? Evidence from a Field Experiment," Rationality and Competition Discussion Paper Series 196, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:196
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    Cited by:

    1. Florian Englmaier & Stefan Grimm & Dominik Grothe & David Schindler & Simeon Schudy, 2024. "The Efficacy of Tournaments for Nonroutine Team Tasks," Journal of Labor Economics, University of Chicago Press, vol. 42(4), pages 921-948.
    2. Henry Eyring & Patrick J. Ferguson & Sebastian Koppers, 2021. "Less Information, More Comparison, and Better Performance: Evidence from a Field Experiment," Journal of Accounting Research, Wiley Blackwell, vol. 59(2), pages 657-711, May.

    More about this item

    Keywords

    peer effects; productivity; rank incentives;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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