Games and Economic Behavior
How does pay-for-performance (P4P) impact productivity and the composition of workers in mission-oriented jobs when output has multiple dimensions? This is a central issue in the public sector, particularly in areas such as education and healthcare. We conduct an experiment, manipulating compensation and mission, to answer these questions. We find that P4P has significantly smaller positive effects on productivity on the incentivized (quantity) dimension in the mission-oriented setting relative to the non-mission-oriented setting. On the other hand, P4P generates no loss in performance on the non-incentivized (quality) dimension of effort in the mission-oriented setting, whereas it does so in the non-mission-oriented setting. In both mission and non-mission settings, P4P attracts higher ability workers, but it does so at the expense of attracting more motivated workers in the mission setting.
Prosocial motivation, Performance pay, Multitasking, Sorting
Jones, Daniel B.; Tonin, Mirco; Vlassopoulos, Michael; and Winichakul, K. Pun, "Paying for what Kind of Performance? Performance Pay, Multitasking, and Sorting in Mission-Oriented Jobs" (2023). Economics: Faculty Publications, Smith College, Northampton, MA.