Please use this form to submit your study for inclusion into our database. It will be checked by a member of the Innovation Growth Lab team, who may be in contact to ask for more information. Your email address * Your name * Title * The name of the study Short summary In this lab experiment intended to recreate sorting into jobs and productivity in those jobs within the labour market, there is stong evidence of multidimensional sorting, including gender, risk attitudes, and productivity. Therefore, firms should consider both effort effects and the self-selection of different types of workers. A brief description of the project's goals and its current state Abstract <p>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.</p> The full abstract of the study, if available Links https://www.aeaweb.org/articles.php Links to any published papers and related discussions Authors * Affiliations Academic and other institutes that the authors of the study are members of Delivery partner Organisations involved in delivering the trial, if appropriate Year Year Year199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026 Month MonthJanFebMarAprMayJunJulAugSepOctNovDec Day Day12345678910111213141516171819202122232425262728293031 Journal Journal publishing the study, if available Publication stage * Working Paper Published Ongoing Research Forthcoming Discussion Paper Research theme * Entrepreneurship Innovation Business Growth Country Country or countries where this study took place. Topics What sort of topics does the study cover? Sample attributes Hypotheses / research question Which personal characteristics beyond individual productivity differences provoke workers to self-select into variable instead of fixed-pay contracts? In particular, how do relevant characteristics like risk aversion, relative self-assessment, social preferences, gender, or personality shape the selection process? How does the composition of the workforce differ when firms offer either fixed wages or variable payments in the form of piece rates, tournaments, or revenue sharing? Sample Trial population and sample selection The experiment was conducted using standard recruiting procedures and the 360 subjects were students from the from the University of Bonn. Randomisation was conducted via computer. Number of treatment groups Size of treatment groups 120 subjects in each of the three groups Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description First, subjects perform a task to elicit individual productivity levels. Subjects are then given a choice between a variable- and fixed-payment scheme. Self-selection into payment schemes decisions of how much to work are observed. Further tasks and choices are administered to elicit further individual characteristics that may be relevant for the sorting decision. The work task consists of multiplying one-digit numbers by two-digit numbers and is characterized by a substantial degree of heterogeneity in productivity. There were three treatment conditions, characterised by different variable-pay schemes. This reveals sorting patterns when the choice is between a fixed payment or either a piece rate, a tournament, or a revenue sharing scheme. These three forms of variable pay constitute the most important forms of explicit performance incentives. Treatments are identical except for the alternative variable-pay scheme. Rounds of data collection Baseline data collection and method Questionnaire data on socioeconomic characteristics and educational achievement. Subjects also completed a verbal IQ test and a personal attitudes test. Data collection method and data collected Evaluation Outcome variables <p>Output, sorting, effort provision and output changes.</p> Results <p>Output: Productivity sorting explains a substantial part of output differences observed in variable versus fixed-payment schemes. Respective median response times for the piece-rate, tournament, and revenue-sharing treatment are 34.5 seconds, 72 seconds, and 116 seconds, respectively. In addition, variance in output is significantly higher in the revenue-sharing treatment suggesting that not only the decision to enter is complex but also that conditional on having selected in to the revenue-sharing treatment, the incentive structure is more complex than in the other two treatments. Sorting: Productive workers are more likely to self-select into variable-payment schemes when offered a fixed-payment scheme as an alternative. This holds for piece-rate, tournament, as well as revenue-sharing schemes. Controlling for productivity, workers are more likely to prefer a fixed-payment scheme the more risk averse they are. Risk attitudes do not seem to matter at all for the decision to select into team incentive schemes. Tournaments attract workers who believe their performance is high, relative to other workers. This effect plays no role in piece rates. Variable-payment schemes generally attract fewer women, an effect that is partly driven by an underlying gender difference in risk attitudes and productivity. The effect is strongest in the most competitive scheme, the tournament. Additional results show that the impact of personal characteristics on the sorting decision is heterogenous, and that social preferences seem to play only a marginal role. Sorting generally depends on a subject’s location in the productivity distribution or on whether a subject’s decision is on the fence. Effort provision and output changes: In our study workers report higher effort levels in pay for performance schemes than in fixed-payment schemes. Moreover, they report higher levels of stress and exhaustion.</p> Intervention costs Not available. Cost benefit ratio Reference Dohmen, T., & Falk, A., 2011. 'Performance Pay and Multidimensional Sorting: Productivity, Preferences, and Gender'. American Economic Review, American Economic Association, vol. 101(2), pages 556-90, April. Citation for use in academic references
