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Paying with Self-Chosen Goals: Incentives and Gender Differences
Dalton,P.S. Gonzalez Jimenez,V.H. Noussair,C.N.
Dalton,P.S.
Gonzalez Jimenez,V.H.
Noussair,C.N.
Abstract
Abstract: To boost employees’ performance, firms often offer monetary bonuses when production goals are reached. However, the evidence suggests that the particular level of a goal is critical to the effectiveness of this practice. Goals must be challenging yet achievable. Computing optimal goals when employees have private information about their own abilities is often not feasible for the firm. To solve this problem, we propose a compensation scheme in which workers set their own production goals. We provide a simple model of self-chosen goals and test its predictions in the laboratory. The evidence we find in the laboratory confirms our model’s predictions for men, but not for women. Men exert greater effort under the self-chosen goal contract system than under a piece rate contract. In contrast, women perform worse under the self-chosen goal contract. Further analysis suggests that this is because women fail to set goals that are challenging enough, because they are less likely to update their goals to take into account their improving performance as they repeat the task.
Description
Date
2015-03-23
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Publisher
Economics
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2015_021.pdf
Adobe PDF, 615.85 KB
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Keywords
contracts, bonus, endogenous goals, productivity, intrinsic motivation, challenge seeking, gender differences, C91 - Laboratory, Individual Behavior, C92 - Laboratory, Group Behavior, J16 - Economics of Gender ; Non-labor Discrimination, J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity, SDG 5 - Gender Equality, SDG 8 - Decent Work and Economic Growth
Citation
Dalton, P S, Gonzalez Jimenez, V H & Noussair, C N 2015 'Paying with Self-Chosen Goals : Incentives and Gender Differences' CentER Discussion Paper, vol. 2015-021, Economics, Tilburg.