What Guides Subjective Performance Evaluation: Incentive Provision or Norm Enforcement?

42 Pages Posted: 18 Aug 2015

See all articles by Robert M. Gillenkirch

Robert M. Gillenkirch

University of Osnabrueck - Faculty of Business and Economics

Heike Kreienbaum

Universität Osnabrück - Faculty of Business and Economics

Date Written: August 17, 2015

Abstract

This paper investigates the objectives guiding a superior’s subjective evaluation of subordinate performance. In a laboratory experiment, we implement a team production setting under uncertainty, where subordinates contribute to joint output by choosing effort levels, but individual contributions are subject to random shocks. After observing joint output, the superior can invest into additional (perfect or imperfect) information about effort levels. We test two competing hypotheses about objectives guiding a superior’s subjective performance evaluation. The incentive provision hypothesis states that the superior is guided by the objective to establish incentive compatibility in that it is in a subordinate’s self-interest to provide effort. In contrast, the norm enforcement hypothesis states that the superior has a focus on subordinate behavior and wants to enforce the norm of cooperation by rewarding high and punishing low effort. Our results reject the incentive provision hypothesis and provide strong support for the norm enforcement hypothesis.

Keywords: subjective performance evaluation, norm enforcement, incentive provision, fairness

JEL Classification: M41, M52

Suggested Citation

Gillenkirch, Robert M. and Kreienbaum, Heike, What Guides Subjective Performance Evaluation: Incentive Provision or Norm Enforcement? (August 17, 2015). Available at SSRN: https://ssrn.com/abstract=2645692 or http://dx.doi.org/10.2139/ssrn.2645692

Robert M. Gillenkirch (Contact Author)

University of Osnabrueck - Faculty of Business and Economics ( email )

Rolandstr. 8
Osnabrück, D-49069
Germany

Heike Kreienbaum

Universität Osnabrück - Faculty of Business and Economics ( email )

Rolandstr. 8
Osnabrueck, D-49069
Germany

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