Performance pay and multi-dimensional sorting: Productivity, preferences and gender

T.J. Dohmen, A. Falk

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This paper studies the impact of incentives on worker self-selection in a controlled laboratory experiment. Subjects face the choice between a fixed and a variable payment scheme. Depending on the treatment, the variable payment is a piece rate, a tournament, or a revenue-sharing scheme. We find that output is higher in the variable-payment schemes compared to the fixed-payment scheme. This difference is largely driven by productivity sorting. In addition, different incentive schemes systematically attract individuals with different attitudes, such as willingness to take risks and relative self-assessment as well as gender, which underlines the importance of multidimensional sorting. (JEL C91, D81, D82, J16, J31)
Original languageEnglish
Pages (from-to)556-590
Number of pages35
JournalAmerican Economic Review
Volume101
DOIs
Publication statusPublished - 1 Jan 2011

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