The Effect of Noise in a Performance Measure on Work Motivation: A Real Effort Laboratory Experiment

Labour Economics, Vol. 17, No. 5, 2010

Tinbergen Institute Discussion Paper No. 2008-074/1

24 Pages Posted: 16 Aug 2008 Last revised: 6 Nov 2014

See all articles by Randolph Sloof

Randolph Sloof

University of Amsterdam - Faculty of Economics & Business (FEB); Tinbergen Institute

Mirjam van Praag

University of Amsterdam - Department of Economics; Copenhagen Business School; Tinbergen Institute; IZA Institute of Labor Economics

Date Written: August 7, 2008

Abstract

This paper reports the results of an individual real effort laboratory experiment where subjects are paid for measured performance. Measured performance equals actual performance plus noise. We compare a stable environment where the noise is small with a volatile environment where the noise is large. Subjects exert significantly more effort in the volatile environment than in the stable environment. This finding is in line with standard agency theory and contrasts a distinct element of expectancy theory; noisier performance measures do not lower work motivation.

Keywords: Performance measurement, noise, work motivation, experiments, agency theory, expectancy theory

JEL Classification: C91, J33, M52

Suggested Citation

Sloof, Randolph and van Praag, Mirjam and van Praag, Mirjam, The Effect of Noise in a Performance Measure on Work Motivation: A Real Effort Laboratory Experiment (August 7, 2008). Labour Economics, Vol. 17, No. 5, 2010, Tinbergen Institute Discussion Paper No. 2008-074/1, Available at SSRN: https://ssrn.com/abstract=1225677 or http://dx.doi.org/10.2139/ssrn.1225677

Randolph Sloof

University of Amsterdam - Faculty of Economics & Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 5241 (Phone)
+31 20 525 4310 (Fax)

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Mirjam Van Praag (Contact Author)

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4096 (Phone)
+31 20 525 4182 (Fax)

Copenhagen Business School ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Tinbergen Institute

Gustav Mahlerlaan
Amsterdam
Netherlands

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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