Increasing Profits in Service Production Through Performance Feedback That Reduces Cognitive Time Distortion

Abstract

This paper contributes to resolving the infamous problem of service production inefficiencies, focusing specifically on service profitability. Two independent experimental laboratory studies show that the profitability of services can be increased using performance feedback that informs task-performing individuals about the accuracy of their temporal assessments of the service tasks they have performed. Reducing inaccuracy in these assessments simultaneously reduces costs and increases service production revenues, boosting service profitability. This effect of feedback on the accuracy of time assessment at work and service profitability is a novel contribution to the literature on the economics of service production.