Fairness properties of compensation schemes
How do different characteristics of pay-for-performance schemes affect fairness perceptions? In two studies, we systematically consider three major classes of incentive schemes: continuous piece rate incentives, discrete bonus schemes, and tournament incentives. We find that pay inequality has a str...
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| Main Authors: | , , , , |
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| Format: | Book/Monograph Working Paper |
| Language: | English |
| Published: |
Munich, Germany
CESifo
June 2025
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| Series: | CESifo working papers
11943 (2025) |
| In: |
CESifo working papers (11943 (2025))
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| Subjects: | |
| Online Access: | Verlag, kostenfrei: https://www.ifo.de/DocDL/cesifo1_wp11943.pdf Verlag, kostenfrei: https://www.ifo.de/en/publications/2025/working-paper/fairness-properties-compensation-schemes Resolving-System, kostenfrei: https://hdl.handle.net/10419/322505 
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| Author Notes: | Christoph Becker, Dietmar Fehr, Hannes Rau, Stefan T. Trautmann, Yilong Xu |
| Summary: | How do different characteristics of pay-for-performance schemes affect fairness perceptions? In two studies, we systematically consider three major classes of incentive schemes: continuous piece rate incentives, discrete bonus schemes, and tournament incentives. We find that pay inequality has a strong negative effect on perceived fairness. Controlling for pay inequality, people consider piece rate schemes fairer than those with a discrete bonus and a tournament design in particular. Adding performance-dependent resource advantages or handicaps negatively influences perceived fairness. We find that procedural fairness judgments are an important factor influencing overall judgments and demonstrate in a third study that the latter have relevant behavioral consequences. |
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| Physical Description: | Online Resource |