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Experimental perspectives on incentives in organisations

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Abstract

Controllability is the decisive advantage of experimental research. Therefore this method suggests itself for investigating clear-cut hypothesis regarding the impact of managerial design issues on organisational behaviour. The current paper reviews selective experimental findings on behaviour under various incentives schemes. It is found that the effectiveness of fixed wages is to a large extent determined by social norms like reciprocity. Fixed wages are analysed if effort is intransparent and in the presence of career concerns. Furthermore they are contrasted with piece rate schemes. Different design options of relative compensation, are discussed with a special emphasis on taking sabotage activities into account.

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  1. London School of Economics, Houghton Street, WC2A 2AE, London, UK

    Bernd Irlenbusch

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I am greatly indebted to my co-authors Christine Harbring, Matthias Kräkel, Reinhard Selten and Dirk Sliwka. Without the exciting collaboration with them this review paper could not have been written. Financial support by the Deutsche Forschungsgemeinschaft through grants KR2077/2-1, KR2077/2-3, IR43/1-1 and the European Union through the EU-TMR Research Network ENDEAR (FMRX-CT98-0238) is gratefully acknowledged.

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Irlenbusch, B. Experimental perspectives on incentives in organisations. cent.eur.j.oper.res. 14, 1–24 (2006). https://doi.org/10.1007/s10100-006-0157-6

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