DP8921 The Role of Salience in Performance Schemes: Evidence from a Field Experiment

Author(s): Florian Englmaier, Andreas Roider, Uwe Sunde
Publication Date: March 2012
Keyword(s): attention, communication, field experiments, incentives, salience
JEL(s): D03, D80, J30, M52
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8921

Incentive schemes affect performance and priorities of agents but, in reality, they can be complicated even for simple tasks. We analyze the effects of the salience of incentives in a team production setting where the principal has an interest in quantity and quality of output. We use data from a controlled field experiment that changed the communication of the incentive system without changing the incentive system. The results indicate that salience of incentives itself is statistically and economically important for performance. We find that higher salience of incentives for quantity increases quantity, reduces quality, and increases in-pocket income of team managers.