The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations
34 Pages Posted: 4 Jan 2010 Last revised: 11 Mar 2023
Date Written: December 2009
Abstract
Recent discoveries in behavioral economics have led to important new insights concerning what can happen in markets. Such gains in knowledge have come primarily via laboratory experiments--a missing piece of the puzzle in many cases is parallel evidence drawn from naturally-occurring field counterparts. We provide a small movement in this direction by taking advantage of a unique opportunity to work with a Chinese high-tech manufacturing facility. Our study revolves around using insights gained from one of the most influential lines of behavioral research--framing manipulations--in an attempt to increase worker productivity in the facility. Using a natural field experiment, we report several insights. For example, conditional incentives framed as both "losses" and "gains" increase productivity for both individuals and teams. In addition, teams more acutely respond to bonuses posed as losses than as comparable bonuses posed as gains. The magnitude of the effect is roughly 1%: that is, total team productivity is enhanced by 1% purely due to the framing manipulation. Importantly, we find that neither the framing nor the incentive effect lose their importance over time; rather the effects are observed over the entire sample period. Moreover, we learn that worker reputation and conditionality of the bonus contract are substitutes for sustenance of incentive effects in the long-run production function.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?
By Lucia Foster, John Haltiwanger, ...
-
Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?
By Lucia Foster, John Haltiwanger, ...
-
Measuring and Explaining Management Practices Across Firms and Countries
By Nicholas Bloom and John Van Reenen
-
Measuring and Explaining Management Practices Across Firms and Countries
By John Van Reenen and Nicholas Bloom
-
Measuring and Explaining Management Practices Across Firms and Countries
By Nicholas Bloom and John Van Reenen
-
Measuring and Explaining Management Practices Across Firms and Countries
By Nicholas Bloom and John Van Reenen
-
Management Practices Across Firms and Countries
By Nicholas Bloom, Christos Genakos, ...
-
Inside the Family Firm: The Role of Families in Succession Decisions and Performance
By Morten Bennedsen, Kasper Meisner Nielsen, ...
-
Inside the Family Firm: The Role of Families in Succession Decisions and Performance
By Morten Bennedsen, Kasper Meisner Nielsen, ...