The Effects of Wage Contracts on Workplace Misbehaviors: Evidence from a Call Center Natural Field Experiment

46 Pages Posted: 13 Jun 2016 Last revised: 18 Jan 2023

See all articles by Jeffrey Flory

Jeffrey Flory

Claremont McKenna College - Robert Day School of Economics and Finance

Andreas Leibbrandt

Monash University

John A. List

University of Chicago - Department of Economics

Date Written: June 2016

Abstract

Workplace misbehaviors are often governed by explicit monitoring and strict punishment. Such enforcement activities can serve to lessen worker productivity and harm worker morale. We take a different approach to curbing worker misbehavior—bonuses. Examining more than 6500 donor phone calls across more than 80 workers, we use a natural field experiment to investigate how different wage contracts influence workers’ propensity to cheat and sabotage one another. Our findings show that even though standard relative performance pay contracts, relative to a fixed wage scheme, increase productivity, they have a dark side: they cause considerable cheating and sabotage of co-workers. Yet, even in such environments, by including an unexpected bonus, the employer can substantially curb worker misbehavior. In this manner, our findings reveal how employers can effectively leverage bonuses to eliminate undesired behaviors induced by performance pay contracts.

Suggested Citation

Flory, Jeffrey and Leibbrandt, Andreas and List, John A., The Effects of Wage Contracts on Workplace Misbehaviors: Evidence from a Call Center Natural Field Experiment (June 2016). NBER Working Paper No. w22342, Available at SSRN: https://ssrn.com/abstract=2794788

Jeffrey Flory (Contact Author)

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States

HOME PAGE: http://https://sites.google.com/site/jfloryeconomics/

Andreas Leibbrandt

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

John A. List

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

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