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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

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Volume 10, Issue 1 (Apr 2010)

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Are You Paying Your Employees to Cheat? An Experimental Investigation

C. Bram Cadsby
  • 1University of Guelph,
/ Fei Song
  • 2Ryerson University,
/ Francis Tapon
  • 3University of Guelph,
Published Online: 2010-04-19 | DOI: https://doi.org/10.2202/1935-1682.2481

Abstract

We compare, through a laboratory experiment using salient financial incentives, misrepresentations of performance under target-based compensation with those under both a linear piece-rate and a tournament-based bonus system. An anagram game was employed as the experimental task. Results show that productivity was similar and statistically indistinguishable under the three schemes. In contrast, whether one considers the number of overclaimed words, the number of work/pay periods in which overclaims occur, or the number of participants making an overclaim at least once, target-based compensation produced significantly more cheating than either of the other two systems. While earlier research has compared cheating under target-based compensation with cheating under non-performance-based compensation, which offers no financial incentive to cheat, this is the first study that compares cheating under target-based schemes to cheating under other performance-based schemes. The results suggest that cheating as a response to incentives can be mitigated without giving up performance pay altogether.

This article offers supplementary material which is provided at the end of the article.

Keywords: cheating; compensation; experiment; guilt; misrepresentation; pay-for-performance; piece-rate; target; tournament

About the article

Published Online: 2010-04-19



Citation Information: The B.E. Journal of Economic Analysis & Policy, ISSN (Online) 1935-1682, DOI: https://doi.org/10.2202/1935-1682.2481. Export Citation

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[1]
David Gill, Victoria Prowse, and Michael Vlassopoulos
Journal of Economic Behavior & Organization, 2013, Volume 96, Page 120
[2]
David T. Welsh and Lisa D. Ordóñez
Organizational Behavior and Human Decision Processes, 2014, Volume 123, Number 2, Page 79
[3]
Michèle Belot and Marina Schröder
Journal of Economic Behavior & Organization, 2013, Volume 93, Page 233

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