Self-control problems change the logic of agency theory by partly aligning the interests of the firm and worker: both now value contracts that elicit future effort. Findings from a year-long field experiment with full-time data entry workers support this idea. First, workers increase output by voluntarily choosing dominated contracts (which penalize low output but give no additional rewards for high output). Second, effort increases closer to (randomly assigned) paydays. Third, the contract and payday effects are strongly correlated within workers, and this correlation grows with experience. We suggest that workplace features such as high-powered incentives or effort monitoring may provide self-control benefits.
Self-control problems change the logic of agency theory by partly aligning the interests of the firm and worker: both now value contracts that elicit future effort. Researchers, in partnership with an Indian data entry firm, conducted a randomized evaluation to test whether self-control problems existed in the workplace and whether workers demanded employer- or self-imposed production targets to mitigate these problems.
Workers with commitment contracts with self chosen targets had higher attendance at work and greater production output. Output was also found to be greater on days that workers were receiving their pay.