The Flipside of Comparative Payment Schemes

Tinbergen Institute Discussion Paper 13-190/I

32 Pages Posted: 30 Nov 2013 Last revised: 29 Jul 2014

See all articles by Thomas Buser

Thomas Buser

University of Amsterdam - Amsterdam School of Economics (ASE)

Anna Dreber

Stockholm School of Economics - Department of Economics

Date Written: July 2014

Abstract

Comparative payment schemes and tournament-style promotion mechanisms are pervasive in the work place. We test experimentally whether they have a negative impact on people’s willingness to cooperate. Participants first perform in a simple task and then participate in a public goods game. The payment scheme for the task varies across treatment groups. Compared to a piece-rate scheme, individuals in a winner-takes-all competition are significantly less cooperative in the public goods game. A lottery treatment, where the winner is decided by luck, has the same effect. In a competition treatment with feedback, winners cooperate as little as participants in the other treatments, whereas losers cooperate even less. All three treatments lead to substantial losses in the realised social surplus from the public good while having no significant impact on performance. In a complementary experiment, we show that priming with competitive norms is the most likely mechanism behind our results.

Keywords: comparative pay; competition; cooperation; gender differences; incentive schemes

JEL Classification: D03, D23, J16, J33

Suggested Citation

Buser, Thomas and Dreber, Anna, The Flipside of Comparative Payment Schemes (July 2014). Tinbergen Institute Discussion Paper 13-190/I, Available at SSRN: https://ssrn.com/abstract=2361108 or http://dx.doi.org/10.2139/ssrn.2361108

Thomas Buser (Contact Author)

University of Amsterdam - Amsterdam School of Economics (ASE) ( email )

Roetersstraat 11
Amsterdam, North Holland 1018 WB
Netherlands

HOME PAGE: http://sites.google.com/site/thomasbuser/

Anna Dreber

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden

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