Other-regarding preferences and performance pay an experiment on incentives and sorting by Eriksson, Tor

Cover of: Other-regarding preferences and performance pay | Eriksson, Tor

Published by IZA in Bonn, Germany .

Written in English

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Subjects:

  • Merit pay

Edition Notes

Book details

Statementby Tor Eriksson, Marie-Claire Villeval.
SeriesDiscussion paper ;, no. 1191, Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) ;, no. 1191
ContributionsVilleval, M. C.
Classifications
LC ClassificationsHD5701
The Physical Object
FormatElectronic resource
ID Numbers
Open LibraryOL3478879M
LC Control Number2005619105

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This paper reports results of a laboratory experiment that analyzes the influence of other-regarding preferences on sorting and incentives. Experimental evidence shows that (i) the opportunity to switch to piece-rate increases the average level of output and its variance; (ii) there is a concentration of high skill workers in performance pay firms; (iii) however, in repeated.

Experimental evidence shows that (i) the opportunity to switch to piece-rate increases the average level of output and its variance; (ii) there is a concentration of high skill workers in performance pay firms; (iii) however, in repeated interactions, efficiency wages coupled with reciprocity and inequality aversion reduce the attraction of performance related pay.

Other-regarding preferences. its variance; (ii) there is a concentration of high skill workers in performance pay firms; (iii) however, in repeated interactions, efficiency wages coupled with reciprocity and inequality aversion reduce the attraction of performance related pay.

Other-regarding preferences influence both the provision of incentives and their sorting effect. concentration of high skill workers in performance pay firms; (iii) however, in repeated interactions, efficiency wages coupled with reciprocity and inequality aversion reduce the attraction of performance related pay.

Other-regarding preferences influence both the provision of incentives and their sorting effect. other-regarding preferences play a d ecisive ro le both in the provision of incentives, and in the incentive and sorting effects of variable pay. The hypothesis of the role of other-regarding.

Other-Regarding Preferences and Performance Pay – An Experiment on Incentives and Sorting. Experimental evidence shows that (i) the opportunity to switch to piece-rate increases the average level of output and its variance; (ii) there is a concentration of high skill workers in performance pay firms; (iii) however, in repeated interactions, efficiency wages coupled with reciprocity and inequality aversion reduce the attraction of performance related pay.

Other-regarding preferences Author: Tor Eriksson and Marie Claire Villeval. Other-Regarding Preferences and Performance Pay An Experiment on Incentives and Sorting June Author: villeval Last modified by: Created Date: 6/3/ PM Document presentation format: Affichage à l'écran Company: CNRS Other titles.

Handbook > Trust, Fairness, and Reciprocity > Useful Concepts> > Other-Regarding Preferences. Printer Friendly. Other-Regarding Preferences.

Other-regarding preferences refer to preferences over another individual's material payoffs, in addition to one's own. Such preferences incorporate notions of fair divisions. Probably the simplest model of other regarding preferences that goes beyond pure altruism is the inequality aversion model, popularized in the late s by Fehr and Schmidt [] and Bolton and Ochenfels [].File Size: KB.

CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions.

The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research. have other-regarding preferences.

We identify a separability condition on monotone preferences that is necessary and su cient for one’s own demand to be independent of the allocations and characteristics of other agents in the economy.

Given separability, it is impossible to identify other-regarding preferences from market behavior: agents be. This study examines whether other-regarding preferences (ORPs) can predict cheating for different beneficiaries: cheating for-self, and other-regarding cheating for an in-group or an out-group member.

The results show that, on the one hand, more prosocial subjects cheat less for self compared to more proself by: 7.

The basic assumption is that social (other-regarding) preferences, such as shame and compassion, is a function of previously offered incentive schemes. I show that it may be optimal to offer incentives based on relative performance evaluation (RPE) in both periods in the dynamic (two-period) setting, even if team incentives, i.e.

joint Cited by: 1. Other-regarding preferences and management styles Article in Journal of Economic Behavior & Organization – April with 39 Reads How we measure 'reads'. Moral Hazard and Other-Regarding Preferences performance contract that creates inequality when their performance outcomes are differ-ent.

The optimal contract depends on the nature of the agents’ other-regarding preferences. incentives through a higher pay upon the success of the project. However, higher-poweredCited by: Other-regarding preferences and performance pay. An experiment on incentives and sorting.

Discussion Paper No.Institute for the Study of Labor (IZA), Bonn. We identify individual other-regarding preferences of managers and determine the impact of other-regarding preferences on managers’ choices by controlling for these preferences in our experiment.

We also explore whether individual demographic characteristics, motivation of managers, and team performance influence the choice of a management by: Tor Eriksson & Marie Claire Villeval, "Other-Regarding Preferences and Performance Pay – An Experiment on Incentives and Sorting," Post-Print halshs, HAL.

Tor Eriksson & Marie Claire Villeval, "Other-Regarding Preferences and Performance Pay. Introduction to Trust, Fairness, Reciprocity and Other-Regarding Preferences. Economists typically assume that someone makes a decision by considering only how the decision's outcome will affect his own material payoff.

Own-Consumption Preferences from Other-Regarding Preferences Under what conditions can one speak of preferences for own as the most he will pay to purchase an item) and each seller sets an asking price (interpreted as the least she will accept to produce the item).

Other-Regarding Preferences in Markets Joel Sobel. MARKET CLEARING I Put. 'People, Performance & Pay' is must-read for all executives and HR professionals who want to understand the point-based pay system, known as the Hay Guide Chart-Profile Methodology.

With concrete examples from their consulting experiences, Thomas ry, David hter, and Paul Platten clearly explain how to develop compensation Cited by: the effects of other-regarding preferences in performance-pay settings.

Bartling and von Siemens () derive optimal incentive con-tracts for risk, inequality, and behindness averse agents in a moral hazard setting. They find that behindness aversion increases the agency costs of providing incentives because agents suffer from both. This game is unchanged by other-regarding payoff transformation, and other-regarding preferences cannot solve the payoff-dominance problem in other games.

This is just one illustration of the fact that game theory cannot model all aspects of strategic decision making, even if it is broad-ened to encompass other-regarding preferences. The payoff-Author: Andrew M.

Colman. The evidence suggests that many people are strongly motivated by other-regarding preferences, and that concerns for fairness and reciprocity cannot be ignored in social interactions. Moreover, several theoretical papers have been written showing that the observed phenomena can be explained in a rigorous and tractable by: Our study presents evidence that social comparison influences both the level of pay and the degree of performance sensitivity within firms.

We report pay patterns among division managers of large, multibusiness firms over a year period. These patterns are consistent with employees comparing pay against both their peers (horizontal comparison) and the chief executive officer Cited by: 9.

How Should Pay Be Linked to Performance. Online forum now CLOSED. Professor Jim Heskett → → →. Incentive pay, also known as "pay for performance" is generally given for specific performance results rather than simply for time worked. While incentives are not the answer to all personnel challenges, they can do much to increase worker performance.

In this chapter we discuss casual and structured incentives. Despite the increasing popularity of comparative work on other-regarding preferences, the implications of different models of altruism are not always fully understood. This article analyzes different theoretical approaches to altruism and explores what empirical conclusions we should draw from them, paying particular attention to models of redistribution preferences where Cited by: Other-regarding preferences and management styles Journal of Economic Behavior & Organization, Vol.

88 The Impact of Korean SMEs' R&D Effort on Innovation - The Moderating Effects of Government Policy Supports -Cited by: Here, we're going to take a look at our Performance Preferences, and these preferences are obviously important because who doesn't want Photoshop to perform at its peak.

These preferences, they're also dynamic. They're tapping into your own specific hardware configuration. These will then help you try to figure out how you can best set these up so.

pay systems on job search with the most consequential pay decisions. However, the possibility existed that job seekers would not be familiar enough with the pay policies to distinguish between them. For instance, pay structure, concerning the number of pay levels and the rate of pro-gression through a pay hierarchy (Milkovich & Newman, In this book, the terms “performance-related pay” and “performance pay” are used as synonyms to refer to a variety of systems linking pay to performance.

Performance-related pay systems are based on the following assumptions: i) organisations can accurately measure individual, team/unit or organisationFile Size: 33KB.

The degree to which pay influences individual and aggregate motivation among employees is called the sorting effect. -t/f. Research shows that the compensable factor skill accounts for _____ percent of the variance in job evaluation results.

The U. federal government's pay structure is based upon _____ job evaluation system. INTRODUCTION. A wide array of experimental evidence suggests that individuals care not only about their own outcomes but the outcomes of their opponents as well; that is, individuals do not necessarily have "selfish" preferences and rather exhibit "other-regarding" or "social" preferences (see Camererfor a summary).

This paper attempts to test the non-monotonic effect of monetary incentives on job satisfaction. Specifically, 8 waves () of the British Household Panel Survey (BHPS) are used to investigate the ceteris paribus association between the intensity of bonus/profit-sharing payments and the utility derived from work.

After controlling for individual heterogeneity biases, it is. Pay for performance has been documented as compromising the good will and cooperation among teachers since it creates competition for a small amount of.

This book is about preferences, principally as they figure in economics. It also explores their uses in everyday language and action, how they are understood in psychology, and how they figure in philosophical reflection on action and morality.

The book clarifies and for the most part defends the way in which economists invoke preferences to Cited by: Incentives and Other-regarding Preferences Four Essays in Experimental Economics Inaugural-Dissertation there are two distinct ways other-regarding concerns have found their way into economic theory.

Pioneered by the works of Fehr and Schmidt () and Bolton Our results indicate that firms pay wage premia to workers with a high.

The canonical model in economics considers people to be rational and self-regarding. However, much evidence challenges this view, raising the question of when “Economic Man” dominates the outcome of social interactions, and when bounded rationality or other-regarding preferences dominate. Here we show that strategic incentives are the key to Cited by:.

Conspicuous Conservation: The Prius Effect and Willingness to Pay for Environmental Bona Fides∗ Steven E. Sexton and Alison L. Sexton Ap “The wish to become proper objects of this respect, to deserve and obtain this credit and rank among our equals, may be the strongest of all our desires.” - Adam Smith 1 IntroductionCited by: Hi, that is simply the Options page, which you can also open by typing about:preferences into the address bar and pressing Enter.

So when you have made your changes, just close the tab to save the settings. If your question is resolved by this or another answer, please take a minute to let us know.

Thank you. Past work indicates that other-regarding preferences may emerge fairly late in ontogeny, suggesting the need for a protracted period of socialization. For instance, when required to distribute goods between themselves and a recipient, children do not distribute goods equally until roughly middle childhood [21], [34], [35].Cited by:

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