Experimental Evidence on the Links among Monetary Incentives, Task Attractiveness, and Task Performance

Abstract

This study reports the results of a laboratory experiment where subjects performed a complex task under two types of compensation contracts, fixed-wage and piece-rate. Additionally, all subjects evaluated the attractiveness of the task prior to learning how they would be compensated during the experiment, and after they performed the experimental task under their assigned compensation contract. The results show that when the task was originally perceived as being attractive, piece-rate compensation led to a significant reduction in the perceived attractiveness of the task and worsened task performance relative to fixed-wage compensation. When the task was originally perceived as being unattractive, the form of compensation did not affect perceptions of task attractiveness or task performance. However, these results did not hold for a second group of subjects who performed a less complex task.