Poster Paper: Performance Under Pressure: How Compensation Schemes Interact with Task Type in Incentivizing Performance

Saturday, November 4, 2017
Regency Ballroom (Hyatt Regency Chicago)

*Names in bold indicate Presenter

Jennifer Graves, Universidad Autonoma de Madrid, Joaquin Artes Caselles, Universidad Complutense de Madrid and Meryl Motika, University of California, Davis

The view predominantly held in economics and business regarding workforce productivity is that greater incentives yield greater work performance. However, the incentives used to motivate effort could alternatively be seen as sources of pressure. In this paper, we used university student participants in an experiment to test how different incentive schemes interact with task type and gender to affect performance. In particular, we investigate effects of competition, piece rate pay, timed goals, and high-stakes pay on routine versus cognitive problem-solving and creative tasks. Each type of task and pressure-inducing incentive was chosen to mimic those commonly found in schools and workplaces. For example, high stakes pay resembles the pressure imposed by performance-contingent scholarships in higher education or bonus pay in the business world.

Previous literature has tested the effects of high-stakes pay and time pressure on creative versus non-creative tasks. However, few studies have drawn a distinction between multiple types of cognitively demanding tasks, such as problem-solving and pure creativity (convergent and divergent thinking) that are treated as different ways of thinking within the psychology literature. Our work is the first to use competition as a form of pressure in this context and the first to focus on gender differences in these effects. While the productivity effects of competition have been extensively studied within economics, the literature has focused largely on differences in performance across participants, and not by task type. Our study aims to bridge these two lines of research which have mostly developed separately in the literature.

We find that all incentivizing payment schemes improve productivity relative to a neutral flat rate payment scheme for routine tasks. However, when performing cognitively challenging tasks - both purely creative and problem solving tasks - incentive schemes have task-specific results. For both of these tasks, we find that participant performance is decreased by high stakes pay. Competition, on the other hand, has the largest boost in productivity for both types of cognitively challenging tasks. Further sessions of our experiment are planned, which will allow for precise estimates of differences by gender.