Cheating in the Workplace: An Experimental Study of the Impact of Bonuses and Productivity

23 Pages Posted: 21 Jul 2012

See all articles by David Gill

David Gill

Purdue University, Department of Economics

Victoria L. Prowse

Purdue University - Department of Economics; IZA Institute of Labor Economics; German Institute for Economic Research (DIW Berlin)

Michael Vlassopoulos

University of Southampton; IZA -- Institute for the Study of Labor

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Abstract

We use an online real-effort experiment to investigate how bonus-based pay and worker productivity interact with workplace cheating. Firms often use bonus-based compensation plans, such as group bonuses and firm-wide profit sharing, that induce considerable uncertainty in how much workers are paid. Exposing workers to a compensation scheme based on random bonuses makes them cheat more but has no effect on their productivity. We also find that more productive workers behave more dishonestly. We explain how these results suggest that workers' cheating behavior responds to the perceived fairness of their employer's compensation scheme.

Keywords: bonus, compensation, cheating, dishonesty, lying, employee crime, productivity, slider task, real effort, experiment

JEL Classification: C91, J33

Suggested Citation

Gill, David and Prowse, Victoria L. and Vlassopoulos, Michael, Cheating in the Workplace: An Experimental Study of the Impact of Bonuses and Productivity. IZA Discussion Paper No. 6725, Available at SSRN: https://ssrn.com/abstract=2114905 or http://dx.doi.org/10.2139/ssrn.2114905

David Gill (Contact Author)

Purdue University, Department of Economics ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

Victoria L. Prowse

Purdue University - Department of Economics ( email )

West Lafayette, IN 47907-1310
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Michael Vlassopoulos

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

IZA -- Institute for the Study of Labor ( email )

Bonn

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