Performance pay and worker cooperation: Evidence from an artefactual field experiment

Stephen Burks, Jeffrey Carpenter, Lorenz Goette

    Research output: Contribution to journalArticlepeer-review

    39 Scopus citations

    Abstract

    We report the results of an artefactual field experiment with bicycle messengers in Switzerland and the United States. Messenger work is individualized enough that firms can choose to condition pay on it, but significant externalities in messenger behavior nonetheless give their on-the-job interactions the character of a social dilemma. Second-mover behavior in our sequential prisoner's dilemma allows us to characterize the cooperativeness of our participants. Among messengers, we find that employees at firms that pay for performance are significantly less cooperative than those at firms that pay hourly wages or who are members of cooperatives. To examine whether the difference is the result of treatment or selection we exploit the fact that firm type is location-specific in Switzerland and that entering messengers must work in performance pay firms in the U.S.

    Original languageEnglish (US)
    Pages (from-to)458-469
    Number of pages12
    JournalJournal of Economic Behavior and Organization
    Volume70
    Issue number3
    DOIs
    StatePublished - Jun 2009

    Bibliographical note

    Funding Information:
    We thank Colin Camerer, John List, Peter Matthews, and two thoughtful referees for comments. We gratefully acknowledge financial support from the MacArthur Foundation's Research Network on the Nature and Origin of preferences and grants to Burks by the University of Minnesota (Grant-in-Aid Program, Office of the Dean of the Graduate School) and to Carpenter by the National Science Foundation (CAREER 0092953). Andrew Anderson, Alex Bertolas, Kyle Carlson, and Tyler Williams provided excellent research assistance. The views expressed herein do not necessarily reflect the views of the Federal Reserve Bank of Boston or the Federal Reserve System.

    Keywords

    • Compensation schemes
    • Field experiment
    • Social preferences
    • Sorting

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