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8-1990
A Comparison of the Effects of a Linear and an
Exponential Performance-Pay Function on Work
Productivity
Shezeen Oah
Western Michigan University
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Oah, Shezeen, "A Comparison of the Effects of a Linear and an Exponential Performance-Pay Function on Work Productivity" (1990).
Dissertations. Paper 2091.
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A COMPARISON OF THE EFFECTS OF A LINEAR
AND AN EXPONENTIAL PERFORMANCE-PAY
FUNCTION ON WORK PRODUCTIVITY
by
Shezeen Oah
A Doctoral Dissertation
Submitted to the
Faculty of The Graduate College
in partial fulfillment of the
requirements for the
Degree of Doctor of Philosophy
Department of Psychology
Western Michigan University
Kalamazoo, Michigan
August 1990
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A COMPARISON OF THE EFFECTS OF A LINEAR
AND AN EXPONENTIAL PERFORMANCE-PAY
FUNCTION ON WORK PRODUCTIVITY
Shezeen Oah, Ph.D.
Western Michigan University, 1990
This study examined how work productivity was affected by the way in which
individual monetary incentives were related to performance.
Two types of
relationships, or performance-pay functions, were compared: a linear function in
which a specific per piece incentive was provided for each piece completed in excess
of a performance standard and an exponential function in which the amount of the per
piece incentive accelerated as productivity increased. Forty college subjects were
randomly assigned to one of the two pay conditions. Each subject participated in 15
forty-five minute sessions. Subjects performed a computerized work task that
simulated the job of a proof operator at a bank, entering the amounts of bank checks
using a keyboard. The dependent variable was the number of correctly completed
checks.
Productivity was comparable for subjects exposed to the linear and
exponential performance-pay functions, even though subjects exposed to the
exponential function earned significantly more money than the subjects exposed to the
linear function. The results suggest that, within certain parameters that have yet to be
determined, differences in the way in which monetary incentives are related to
performance may not differentially affect performance.
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O rd er N u m b e r 9 1 0 1 0 0 1
A co m p ariso n o f th e effects of a lin e a r a n d an e x p o n e n tia l
p erfo rm a n ce-p ay fu n c tio n on w o rk p ro d u c tiv ity
Oah, Shezeen, Ph.D.
Western Michigan University, 1990
C opyright © 1 9 9 0 by O ah, Shezeen. A ll rights reserved.
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Copyright by
Shezeen Oah
1990
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ACKNOWLEDGEMENTS
I would like to express my appreciation to those individuals who made this
study possible. First, I would like to thank my advisor, Dr. Alyce Dickinson, who
introduced me to the field of organizational behavior management and guided the
conduct of the present study. I would also like to thank the following individuals
who served as experimenters: M. Biby, B. Cole, W. Fieener, C. Handler, G. Henry,
K. Kopp, C. Logan, and J. Ramsey.
Finally, I would like to express my deepest appreciation and gratitude to my
parents. I could not have completed my graduate training, which culminated in this
study, without their support during the past five years and during my earlier education
as well.
Shezeen Oah
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TABLE OF CONTENTS
ACKNOW LED GEM EN TS................................................................................................
ü
LIST OF T A B L E S ...............................................................................................................
v
L IS T
O F F IG U R E S ..................................................................................................
vi
CHAPTER
I.
IN T R O D U C n O N .....................................................................................
1
II.
DESIGN AND M ETH O D O LO G Y ........................................................
8
S u b j e c t s ..............................................................................................
8
S e ttin g
8
and A p p a ra tu s ...............................................................
M e th o d .................................................................
8
Experimental D esign.....................................................................
8
W ork Task and Dependent V ariable..........................................
9
The Independent Variables (the performancepay fu n ctio n s)................................................................................
11
P ro ced u re ........................................................................................
15
R E SU L T S...................................................................................................
17
IV. D IS C U S S IO N ............................................................................................
22
III.
A PPEN D IC ES......................................................................................................................
29
A.
Informed Consent F o r m ...........................................................................
30
B.
W estern M ichigan University's Hum an Subject
Institu tio n al R ev iew B oard A p p ro v al...........................................
34
Payment Schedule for the Exponential
Performance-Pay F u n c tio n .....................................................................
36
Payment Schedule for the Linear
Performance-Pay F u n c tio n .....................................................................
39
C.
D.
m
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Table of Contents-Continued
E.
Instructions to Subjects.....................................................................
42
F.
Graphs of the Performance of Individual Subjects..........................
46
BIBLIOGRAPHY....................................................................................................
57
IV
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U S T OF TABLES
1. Performance M eans and Standard Deviations
by S e s s io n ....................................................................................................................
18
2 . Pooled Performance M eans and Standard Deviations
for the N um ber o f Checks Com pleted in the
L ast Five S essions......................................................................................................
19
3. Source Table for the Analysis o f Variance Conducted
on the Pooled Means o f Subject Perform ance
D uring the Last Five Sessions..................................................................................
19
4 . Source Table for the Analysis o f Variance
Conducted on the Mean Slopes o f the
Regression L ines.........................................................................................................
20
5. Source Table for the Analysis o f Variance
Conducted on the M eans o f the Pay
E a rn e d by S u b je c ts ............................................................................................
21
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LIST OF FIGURES
1. Linear Relationship Between Performance
and Pay for a Fixed per Piece Incentive
Arrangement.......................................................................................................
3
2. Simulated Check as Displayed on the
Computer Screen.................................................................................................
10
3. Screen Display When Subjects Clicked on the
NUMBER COMPLETE Box.............................................................................
11
4. The Performance-Pay Functions......................................................................
12
5. Mean Number of Checks Completed by Session............................................
17
6. Amount of Pay Earned by Subjects in the Exponential
and Linear Performance-Pay Conditions..........................................................
21
VI
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CHAPTER I
INTRODUCTION
When performance-contingent pay has been compared with hourly pay in both
applied and laboratory settings, it has consistently been found to increase productivity
(Bushhouse, Feeney, Dickinson, & O'Brien, 1982; Farr, 1976; Gaetani, Hoxeng, &
Austin, 1985; Locke, 1982; Nash & Caroll, 1975; Orpen, 1982; Terborg & Miller,
1978; Vough, 1979; Weinstein & Holzbach, 1973). The increases in productivity
have often been quite dramatic in applied settings. According to Jenkins and Gupta
(1982), for instance, a number of organizations that have implemented incentive
systems have benefitted by a several hundred percent increase in productivity. Vough
(1979) indicated that incentive systems have resulted in a 200 percent increase in
productivity over a 10-year period at IBM, and Dierks and McNally (1987) were
successful in increasing productivity 200 to 300% by implementing performancecontingent pay systems at Union National Bank in Little Rock, Arkansas. Further,
Locke (1982) concluded, based on a review of the experimental literature, that
monetary incentives increase productivity more than other popular performance
management techniques such as goal setting, employee participation, and job
enrichment
Due to the effectiveness of performance-contingent pay systems, an increasing
number of organizations have implemented them in the past several years (Dolan,
1985; Murray, 1987; O'Dell, 1986; Skryzcki, 1987). However, several design and
implementation problems need to be resolved before such systems can be uniformly
successful. For example, several researchers and practitioners have raised the
1
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2
following questions: How should the incentives be related to performance? How can
fair performance standards upon which the incentives are based be developed? What
is the appropriate proportion o f incentives to base pay? Are incentives appropriate
when workers have little control over their own performance? How frequently should
incentives be provided? (Kesselman, Wood & Hagen, 1974; Kopelman, 1983;
Lawler, 1971; Mihal, 1983) Although these design questions need to be answered in
order to design effective incentive systems, few studies have examined these issues.
The purpose of the present study was to investigate one design issue that may
influence the efficacy of individual incentive systems: The way in which incentives are
related to performance, the performance-pay function.
In many organizations in which individualized monetary incentives are
implemented, a specific incentive amount is provided for each part that is produced or
for each part that is produced above some specified performance standard. These
types of fixed per piece incentive arrangements represent linear relationships between
performance and pay. For illustrative purposes, assume that workers receive a
guaranteed hourly wage and, in addition, $.10 for each part produced in excess of a
specified standard. If workers produced 100 parts above standard, they would
receive $10.00 in incentives in addition to their guaranteed hourly pay; if they
produced 150 parts above standard, they would receive $15.00 in incentives. This
linear relationship between performance and pay is depicted in Figure 1.
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20
2
18
O
16
CO
14
Ic
12
m
uc
10
*o
8
I
6
CO
UJ
c
3o
4
E
2
<
0
0
20
40
60
80
100
120
140
160
180
200
Number of Parts Produced above Standard
Figure 1. Linear Relationship Between Performance and Pay
for a Fixed per Piece Incentive Arrangement.
Some organizations, on the other hand, have implemented incentive systems
in which the per piece incentive accelerates as productivity increases: The more parts
that are produced, the more each part is worth. For example, a worker may receive
$.07 for the 50th part produced but $.10 for the 100th part produced.
This
accelerated pay arrangement results in an exponential relationship between incentives
and pay. The rationale for accelerated performance-pay functions is that the more a
worker produces, the more difficult it is to produce more, and therefore workers
should be paid increasingly more per piece as productivity increases (K. McNally,
personal communication, 1985).
When compared to linear performance-pay
functions, workers exposed to comparable exponential performance-pay functions
earn less pay for lower levels of performance but more pay for higher levels of
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4
performance (for an illustration, see Figure 4 which displays the performance-pay
functions that were used in this study). For this reason, exponential or accelerated
functions might increase productivity more quickly and sustain higher levels of
productivity over time than linear functions. However, no empirical studies have
compared the effectiveness of accelerated and linear performance-pay functions.
Although direct comparison data are lacking, many studies have examined a
related phenomenon; the effects of increased reward magnitude on performance. A
number of researchers, examining the effects of reward magnitude on the performance
of nonhumans, found that when two reinforcement schedules with different
reinforcement magnitudes were simultaneously available, subjects responded with
higher rates on the manipulanda associated with the schedule that provided the largest
reinforcer (Catania, 1963; Dunn, 1982; Fantino, Squires, Delbruck, & Peterson,
1972; Picker & Poling, 1982; Schneider, 1973). Although the responses in this
situation were choice behaviors, the findings from these studies do suggest that
reward magnitudes affect performance. However, investigations not involving the
"choice" situation have generated inconsistent results. Some researchers (Guttman,
1953; Jensen & Fallon, 1973; Lendenman, Myers, & Fantino, 1982; Mazur, 1983;
Schlinger, Blakely, & Kaczor, 1990; Shettleworth & Nevin, 1965) have reported that
increases in the magnitude of reinforcement (the duration of access to reinforcement)
resulted in an increased response rate, while others have reported conflicting results
(e.g., Felton & Lyon, 1966; Keesey & Kling, 1961 ; Powell, 1969; Staddon, 1970).
Similarly, although Pubols (1960), based on a review of the early research with
nonhumans, concluded that increased magnitudes of rewards increase performance,
Bonem and Crossman (1988), in a more recent review, indicated that changes in the
magnitude of reinforcement have not always produced changes in responding.
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5
In summary, the experimental literature conducted with nonhumans suggests
that in choice situations, increases in the magnitude of reinforcement increase
responding. While the results of studies of nonchoice situations are ambiguous, the
nonhuman experimental literature does provide some indirect, albeit weak, support for
the assumption that exponential performance-pay functions may increase performance
when compared to linear performance-pay functions. However, it is not at all clear
that the results of studies with nonhumans would generalize to humans as indicated by
the different results obtained by studies that have examined human and nonhuman
reinforcement schedule performance (Ader & Tatum, 1961; Baron & Galizio, 1983;
Baron, Kaufman, & Stauber, 1969; Galizio, 1979; Harzem, Lowe, & Bagshaw,
1978; Hayes, Brownstein, Zettle, Rosenfarb, & Korn, 1986; Leander, Lippman, &
Meyer, 1968; Lowe, Harzem, & Hughes, 1978; Matthews, Shimoff, Catania, &
Sagvolden, 1977; Shimoff, Catania, & Matthews, 1981; Weiner, 1964,1969).
Although most of research on reward magnitude has been conducted with
nonhumans, Toppen (1965a, 1965b) conducted three studies with humans. In his
first study (1965a), a 2 x 2 factorial group comparison design was used to assess the
effects of reward magnitude and reward frequency on work output. During one onehour session, college subjects received either 1 cent or 25 cents for pulling a lever an
average of either 500 or 2500 times. In other words, subjects were exposed to either
a variable ratio 500 or 2500 reinforcement schedule with rewards of either 1 cent or
25 cents. Results indicated that work output was significantly greater for subjects
who received the 25 cent reward in comparison to subjects who received the 1 cent
reward, and for subjects who were exposed to the variable ratio 500 reinforcement
schedule in comparison to subjects who were exposed to the variable ratio 2500
reinforcement schedule. The results further suggested that the amount of the reward
was more powerful than the frequency with which it was delivered. These data led
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6
Toppen to conclude that "hum ans responding to money reward are like other animals
responding to other types o f rew ard. They show greater perform ance in response to
greater m agnitude and greater ratio o f incidence o f reward to units o f effort expended"
(p. 267).
In a second study, Toppen (1965b) examined the effects o f decreased reward
magnitude on lever pulling. All subjects received a monetary rew ard after completing
an average o f 1000 lever pulls. Subjects in the control group received 10 cents per
reinforcem ent. F o r subjects in tw o groups, after a 10 cent rew ard had been delivered
three tim es, the m agnitude o f the reinforcem ent was decreased abruptly to 1 cent or
was gradually decreased incrementally by 1 cent per reinforcem ent Subjects exposed
to the decreasing m onetary rew ards pulled the lever significantly few er tim es than
control group subjects. F urther, a w ithin-subject analysis o f the perform ance of
subjects in the decreasing-reinforcem ent groups revealed that lever pulls decreased
over tim e as a function of the decreases in the am ount of the rew ard. A lthough the
study exam ined decreasing am ounts o f m onetary rew ards rath er than increasing
am ounts as w ould occur in an exponential perform ance-pay function, the results
certainly suggest that hum an performance is sensitive to changes in the m agnitude of
m onetary rew ards. In a third m ore relevant study, Toppen (1965b) exam ined the
effects of increased rew ard m agnitude on performance. As in the preceding study,
subjects received a m onetary rew ard after completing an average o f 1000 lever pulls.
For one group o f subjects, the am ount of the rew ard was increased from 10 cents to
20 cents after the reinforcem ent had been delivered three times. For another group of
subjects, after the 10 cent rew ard had been delivered three tim es, the am ount of the
rew ard was increased by 10 cents each tim e the rew ard was delivered. F o r this
group, the m agnitude o f the rew ard w as lim ited only by the su b ject's own
perform ance: the m ore the subject pulled the lever, the higher the m agnitude of
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7
reinforcement. The performance of subjects who received increasing amounts of
money was higher than the performance of subjects who received a fixed amount of
10 cents per reinforcement, however, the performance differences were not
statistically significant at the .05 level. Taken together, the results of Toppen’s
studies suggest that human performance is indeed sensitive to changes in reward
magnitude and, further, that increases in monetary rewards may well result in
increases in performance.
These data, thus, also suggest that an exponential
relationship between performance and pay may increase performance more than a
linear relationship.
The purpose of the present study was to directly compare the effects of an
exponential and linear performance-pay function on work productivity. Unlike
Toppen's studies (1965a, 1965b) in which subjects were exposed to the pay
conditions for a total of only one hour, subjects in the current study participated in
fifteen forty-five minute sessions in an effort to examine their performance over a
relatively extended period of time. The following two questions were addressed:
1. Does an exponential performance-pay function increase productivity more
quickly than linear performance-pay function?
2. Does an exponential performance-pay function sustain higher levels of
productivity over time?
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CH APTER n
DESIGN AND M ETHODOLOGY
Subjects
Subjects w ere 40 m ale and fem ale volunteer college students, recruited from
freshm en and sophom ore level psychology courses, w ho w ere p a id fo r their
participation. N o screening criteria were used. Prior to participation, subjects signed
an inform ed consent form w hich is included as A ppendix A. The consent form,
together with research protocol, was approved by W estern M ichigan U niversity's
H um an Subject Institutional R eview B oard prior to the start o f the study (see
Appendix B for the approval letter).
Setting and Apparatus
Sessions w ere conducted in three sm all experim ental room s, each equipped
with a M acintosh Plus com puter and tw o 800K disk drives. Each subject w orked in
isolation. Each room had a clock and a radio, which subjects could, if they wished,
listen to during the session.
Method
Experimental Design
A betw een-group experim ental design was adopted, w ith tw enty subjects
random ly assigned to a linear perform ance-pay function condition an d tw enty
8
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9
assigned to an exponential performance-pay function condition. The performance-pay
functions and the work task are described in detail in subsequent sections. Each
session lasted 45 minutes and each subject participated in 15 sessions.
Work Task and Dependent Variable
The work task consisted of a computerized simulation of a proof operator's
job at a bank. Proof operators, using a machine that resembles a key-punch machine,
encode machine-readable numbers on the bottom of checks and deposits so that these
items can be processed by the bank's computers. Simultaneously the operators
"proof the accuracy of the daily transactions of the bank tellers. The work task used
in this study, while not a perfect simulation of this job, simulated some of the
essential components. The simulation was developed through collaboration with
executives from Union National Bank in Little Rock, AR, and was developed
specifically for this research.
Simulated bank checks were displayed on the computer screen. An example
of a check is shown in Figure 2 on the following page. On each simulated check, a
different cash value appeared. The subjects typed the cash value using the computer
keyboard. As they typed the numbers, the numbers appeared in the box located at the
bottom of the computer screen. After each cash value was typed, the ENTER or
ÎŒTÜRN key had to be pressed in order for subjects to proceed. If the amount had
been correctly typed, another check appeared on the screen and the procedure was
repeated. If the subjects did not type the cash value correctly, a "BEEP" sounded
after the RETURN or ENTER key had been pressed. The subject then had to correct
the mistake and press the RETURN or ENTER key again. Once the correct cash
value had been typed, and the RETURN or ENTER key pressed, another check was
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10
esenîed. The dependent variable was thus the num ber o f correctly com pleted
checks which the com puter automatically recorded.
12:47
chB ckt
/'^ e s fe m M ic h ig an
.19
UnlversltyBanklrrig
331.55
J o h n L. D o e
Dollars
Signed
l-EMO
Jl.
PleasB e n t e r th e ahouB check * cash ualue and p re s s Return.
EKQmple: 331.55 (Return)
[
Number compiBie"
O.K.
Figure 2. Simulated Check as Displayed on the Com puter Screen.
Subjects could determ ine how m any checks they had com pleted during the
session at any tim e. In order to do this, subjects m oved the com puter "pointer" (the
sm all arrow located at the upper left com er o f the screen in Figure 2) to the box
labeled N U M B ER C O M PLETE (see Figure 2) by using the com puter "mouse" and
pressing the button on the "mouse." This procedure is referred to as "pointing" and
"clicking" in M acintosh com puter usage m anuals. A fter the num ber of com pleted
checks was displayed, subjects "pointed" and "clicked" on the O K box in order to
resum e the w ork task (see Figure 3).
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11
l A /' / ü
f I
Michigan
19 8 8
PAY
ORQEl
You Haue Completed 0
Checks.
O.K.
Signed
MEMO
jl .
J J ôT
Figure 3. Screen Display W hen Subjects Q icked on the NU M BER COM PLETE
B ox.
The lndependent Variables (the performance-pay functions)
Subjects in both conditions received a base pay am ount and a per check
incentive when performance exceeded a specified perform ance standard. Specifically,
subjects received $2.00 for correctly completing from 1 to 490 checks and a per check
incentive for each correctly completed check in excess o f 490.
The perform ance standard o f 490 was determ ined through pilot work. During
a pilot study, five subjects were paid $3.50 (a guaranteed w age w ith no incentives) a
session fo r com pleting the checks.
Each subject particip ated in ten 45-m inute
sessions. T he perform ance standard of 490 was one standard deviation below the
m ean perform ance o f these subjects.
The independent variable consisted o f the variation in the perform ance-pay
functions. As indicated earlier, a linear perform ance-pay function and an exponential
perform ance-pay function were examined. These functions are displayed in Figure 4.
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12
5.0 n
4 .5 Exponential
4 .0 -
52
I
3 .5 -
-
3.0 -
Q
Linear
«
0.
«
g
2 .5 -
2 .0 -
400
450
500
550
600
650
700
750
800
850
900
Number of Checks Completed
Figure 4. The Performance-Pay Functions.
Both pay functions begin at the performance standard of 490 checks and end
at 860 checks. Eight hundred and sixty checks represents the number of checks that
can reasonably be completed during a 45-minute session by subjects who are paid
incentives. This figure was obtained from a pilot study in which five subjects were
paid $.005 for each correctly completed check. Each pilot subject participated in ten
forty-five minute sessions. The 860 checks represents two standard deviations above
the mean performance of these pilot subjects.
The exponential performance-pay function is a 1.5 exponential function. The
function was determined by a three-step process. First, the starting point (490
checks) and ending point (860 checks) of the function were determined from the pilot
research that was previously described. Second, the amount of money that subjects
could earn for completing 490 checks was arbitrarily selected ($2.00) as was the
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13
maximum amount of money subjects could earn for completing 860 checks ($5.00).
Third, the incentive amount for checks in between 490 and 860 was incremented by a
multiplicative factor of 1.5. The resulting total amounts of money (the $2.00 base pay
plus incentives) that subjects could earn per session for completing specific numbers
of checks are displayed in graphic form in Figure 4 and in tabular form in Appendix
C.
The linear performance-pay function was determined after the exponential
performance-pay function had been determined. It is difficult to determine what linear
function should be compared to the exponential function, or in other words, what the
slope of the linear function should be in order to match conditions and control for the
amount of money earned by subjects in the two groups. From an experimental
standpoint, the slope of the linear function should be determined such that the average
amount of money earned by subjects exposed to the linear function would equal the
average amount of money earned by subjects exposed to the exponential function.
Otherwise, observed differences in productivity could be atmbuted to differences in
the amount of pay earned rather than to the differences in the performance-pay
functions.
However, the average amounts earned by subjects exposed to the
performance-pay functions cannot be determined a priori because they depend upon
the number of checks completed by the subjects. If it could be assumed that the
performance of subjects would be equally distributed along the performance-pay
functions, then the comparable linear function could be determined by making the
spatial area on a graph under the linear and exponential functions equal. However,
incentive payment typically increases the productivity of workers and, therefore, the
productivity distribution would no doubt be skewed toward the high end of the
functions. Due to the problem of identifying the linear performance-pay function that
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14
w ould result in com parable earnings, the slope o f linear perform ance-pay funciion
was determ ined logically as explained in the following paragraphs.
In a w ork setting, prior to the im plem entation of an incentive system ,
employees are typically paid a guaranteed wage. The only performance data available
to an organization prior to the im plem entation o f an incentive system is thus average
perform ance under this guaranteed w age system . In a real work setting, therefore,
these d a ta m u st be used as the basis for determ ining the relationship betw een
perform ance and pay. Because of this, in the present study, the average perform ance
o f pilot subjects w ho were paid a guaranteed w age was used to determine w hat linear
function should be com pared to the exponential function: If subjects in both groups
perform ed at the average o f the pilot subjects, they would receive the same am ount o f
m oney. A s a result, the linear perform ance-pay function was designed so that it
crossed the exponential function at 585 checks, which was the mean perform ance o f
pilot subjects w ho were paid a guaranteed w age o f $3.50 for completing the checks.
Thus, in the present study, if subjects in both groups com pleted 585 checks, they
w ould receive the sam e am ount o f m oney. T o determ ine the slope of the linear
function a straight line was drawn from the 490-check starting point through the point
at which subjects would earn $2.39 for com pleting 585 checks. The total am ounts of
m oney (the $ 2.00 base pay plus incentives) that subjects exposed to the linear
function co u ld earn p er session for com pleting specific num bers o f ch eck s are
displayed in graphic form in Figure 4 and in tabular form in Appendix D. The per
check incentive for each check completed in excess of 490 was $.004.
A s can be seen in Figure 4 o r by com paring the pay tables in A ppendices C
and D , i f the num ber o f checks com pleted w as below 585 (but above the 490
perform ance standard), subjects exposed to the linear function w ould earn m o re
m oney than subjects exposed to the exponential function; if the num ber o f checks
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15
com pleted equaled 585, subjects exposed to the linear function w ould earn the same
am ount o f m oney as subjects exposed to the exponential function; and if the number
o f checks com pleted was above 585 checks, subjects exposed to the linear function
w ould earn less m oney than subjects exposed to the exponential function. Because
585 checks represented the m ean perform ance o f subjects who w ere paid a guaranteed
base pay o f $3.50, it w as expected that the m ean perform ance o f subjects in both
groups w ould be higher than 585 due to the m onetary incentives.
T hus, it was
expected that subjects exposed to the exponential function w ould earn m ore money
per session than subjects exposed to the linear function. If differences in performance
w ere found, further research w ould have been necessary to determ ine w hether those
differences were due to the perform ance-pay functions or to differences in the amount
o f m oney earned by subjects by exam ining linear functions that w ould result in more
com parable earnings. H ow ever, if no perform ance differences w ere observed, then
one could conclude that the exponential function did not im prove perform ance even
though subjects earned considerably m ore money, and further research w ould not be
necessary.
Procedure
During the initial session, the experim enter demonstrated the w ork task for the
subjects and gave subjects both a graph and a table that displayed the relationship
betw een the num ber o f checks com pleted and the total amount o f pay they w ould earn
for com pleting from 1 to 860 checks. Subjects were told that they could refer to the
pay graph and table at any tim e before, during or after a w ork session. Subjects were
given the opportunity to try out the task and to ask any questions they m ay have had
about the task and/or the pay system prior to the start o f the first session. Subjects
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16
were also told that they could take work breaks whenever they wanted. The actual
instructions read to subjects are provided in Appendix E.
For each of the subsequent sessions, the experimenter started the session, and
left the experimental room. At the end of the session, the experimenter stopped the
session, plotted me number of correctly completed checks on a graph in the presence
of the subject, and recorded the amount earned by the subject during that session.
Subjects were paid in cash once a week.
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CHAPTER m
RESULTS
Figure 5 displays the m ean num ber of checks co m p leted by session by
subjects in the exponential and linear perform ance-pay conditions, and Table 1
displays the means and corresponding standard deviations by session. As can be seen
from these displays, the m ean num ber o f checks com pleted in each session was
consistently higher fo r the exponential than for the linear group. The differences
betw een the m eans increased in the later sessions. G raphs of the perform ance of
individual subjects can be found in Appendix F.
900
Exponential group
■a
Ia.
eo
850
Linear group
800
O
%
(D
x:
Ü
750
I3
650
Z
c
(0
700 -
600
550
500
6
7
8
9
1 0 1 1 1 2 1 3 1 4 1 5
S e s s io n s
Figure 5. M ean N um ber o f Checks Com pleted by Session.
17
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18
Table 1
Perform ance Means and Standard Deviations by Session
Exponential Condition
Linear Condition
Session
Mean
SD
Mean
SD
1
628
97.3
602
57.8
2
663
99.2
647
61.2
3
685
97.7
668
64.8
4
706
92.0
682
65.2
5
710
91.0
690
57.5
6
727
94.6
703
619
n/
728
89.3
689
90.8
8
742
86.0
724
62.9
9
749
84.2
711
76.0
10
750
81.7
729
63.7
11
766
86.4
727
72.2
12
773
77.7
738
68
13
779
79.7
743
62.6
14
783
81.9
727
73.6
15
787
81.2
745
67.4
Overall
732
88.0
702
67.1
In order to determ ine whether productivity w as differentially affected by the
two perform ance-pay functions, an ANOVA was conducted on the pooled m eans of
the last five sessions. The analysis was conducted on the pooled means of only the
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19
last five sessions in order to determ ine the effects o f the two pay functions after
subjects had been exposed to them for as long as possible within the constraints o f the
study. In o rder to determ ine the pooled m eans, the average num ber o f checks
com pleted during the last five sessions was calculated for each subject. The m ean o f
these averages w as then determ ined for subjects in each group, and the A N OV A was
conducted on the m eans. The pooled perform ance m eans and standard deviations are
presented in Table 2. The pooled m ean for subjects in the exponential perform ancepay condition w as 777 w ith a standard deviation o f 80, and the pooled m ean for
subjects in the linear performance-pay condition was 736 with a standard deviation of
66. As can be seen from the source table provided in Table 3, the results w ere not
significant at the .05 level.
Table 2
Pooled Performance M eans and Standard Deviations for the
N um ber o f Checks Com pleted in the Last Five Sessions
G roup
Mean
SD
Exponential
111
80
Linear
736
66
Table 3
Source Table for the Analysis o f Variance Conducted on the Pooled M eans
o f Subject Performance D uring the Last Five Sessions
Source
DF
Between
1
17098.225
17098.225
3.165
W ithin
38
205302.750
5402.704
P > 05
Total
39
222400.975
SS
MS
F
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20
In order to determine whether the exponential performance-pay function
increased productivity more quickly than the linear function, an analysis of variance
was conducted on the mean slopes of the regression lines for the two groups.
Regression lines were determined for each subject across the 15 sessions, and then
the individual slopes were averaged within each group to obtain the mean regression
slope. If productivity had increased more quickly for subjects exposed to the
exponential function, the mean slopes of the regression lines would have differed.
The mean slopes for the exponential group and the linear group were 10.02 and 8.09,
respectively. As can be seen from the source table provided in Table 4, however, the
difference between the mean slopes was not statistically significant at the .05 level
(F=3.365, p>.05).
Table 4
Source Table for the Analysis of Variance Conducted on
the Mean Slopes of the Regression Lines
SS
MS
F
Source
DF
Between
1
37.237
37.237
1365
Within
38
420.545
11.067
p>.05
Total
39
457.782
In addition to analyzing the number of checks completed, the amount of pay
earned by subjects in each group was analyzed. The mean pay earned by subjects by
session is displayed in Figure 6.
As expected, subjects in the exponential
performance-pay condition earned substantially more pay than subjects in the linear
performance-pay condition. An analysis of variance conducted on the mean pay
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21
earned by subjects for all fifteen sessions indicated that the pay differences were
statistically significant at the .0001 level, as can be seen in Table 5 (F=55.36,
p<.0001).
5
Exponential Group
2
■q
a
-2
Linear Group
4
3
2
0
1
2
3
4
5
6
7
8
9
10 1 1 12 1 3 14 15
S essio n s
Figure 6. Amount of Pay Earned by Subjects in the Exponential
and Linear Performance-Pay Conditions.
Table 5
Source Table for the Analysis of Variance Conducted on the Means
of the Pay Earned by Subjects
Source
DF
SS
MS
F
Between
1
4.641
4.641
55.357
Within
28
2.348
.084
p<.0001
Total
29
6.989
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CHAPTER IV
DISCUSSION
The results of the present study revealed that the 1.5 exponential performancepay function did not result in greater overall productivity, nor did it increase
productivity more quickly than the linear function. An analysis of the average amount
of money earned by subjects in the two conditions revealed, as expected, that the
subjects exposed to the exponential performance-pay function earned significantly
more money per session than subjects exposed to the linear performance-pay
function, $3.65 and $2.86 per session, respectively. Therefore, in spite of the fact
that subjects exposed to the exponential function earned significantly more money
than those exposed to the linear function, their productivity was not higher nor did it
improve more quickly.
It is possible that individual monetary incentives are so powerful that relatively
small differences in the way in which the incentives are related to performance may
not differentially affect performance. With respect to the power of individual
monetary incentives, the results of numerous studies, as indicated earlier, support the
effectiveness of individual monetary incentives in comparison to hourly pay
(Bushhouse et al., 1982; Dierks & McNally, 1987; Farr, 1976; Gaetani et al., 1985;
Jenkins & Gupta, 1982; Locke, 1982; Nash & Caroll, 1975; Orpen, 1982; Terborg &
Miller, 1978; Vough, 1979; Weinstein & Holzbach, 1973). Further, the results of a
recent study conducted by Frisch and Dickinson (in press) not only provide additional
evidence of the power of monetary incentives but also suggest that differences in the
way in which incentives are related to performance may not result in differences in
22
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23
productivity. F risch and D ickinson, in a betw een-group com parison, exam ined
w hether w ork productivity was affected by the percentage o f incentives to base pay;
that is, did w ork productivity increase as the percentage o f incentives to base pay
increased? Subjects earned an average o f 0% , 3% , 13%, 25% , or 54% o f their base
pay in incentives (subjects in the 0% condition received a guaranteed w age and w ere
not given the opportunity to earn incentives). Subjects who earned an average o f only
$.11 per session in incentives (3% o f their $3.63 base pay) perform ed significantly
better than subjects w ho received a guaranteed w age of $4.00 per session, revealing
the pow er o f m onetary incentives. How ever, subjects w ho earned 3% o f their base
pay in incentives did not perform significantly better than the subjects w ho earned
13%, 25% , and 54% o f their base pay in incentives, even though the subjects in the
3% condition earned considerably m ore m oney than subjects in the 13%, 25% , and
54% conditions. Sim ilar to the present study, subjects w ho earned m ore m oney in
incentives did not perform significantly better. Thus, within certain param eters that
have yet to be determ ined, the amount o f the incentives and the way in which they are
related to perform ance m ay not differentially affect perform ance. I f this is the case,
then when individual m onetary incentive system s are designed and im plem ented they
can be tailored to m eet the needs and constraints o f the organization w ithout concern
that one system will be significantly less effective than other. Considerations such as
cost effectiveness, sim plicity, and employee acceptance and satisfaction can guide the
design o f such system s.
T he results o f the present study are consistent w ith the results o f the study
conducted by Toppen (1965b) in which he exam ined the effects of increased rew ard
m agnitude on perform ance. In his study, subjects who received increased m agnitudes
o f m onetary incentives perform ed consistently better than subjects who received an
unvarying incentive amount, however, the results were not statistically significant. In
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24
addition, a within-subject analysis revealed that the performance of subjects who
received higher and higher incentive amounts increased as the amount of the incentive
increased. Similarly, in the present study, subjects who received increasing incentive
amounts due to exposure to the exponential performance-pay function performed
consistently better than subjects exposed to the linear performance-pay function, and
the differences increased over time although, as in Toppen's study, the differences
were not statistically significant
The results of Toppen's second study (1965b) and the present smdy need not
be seen as conflicting with the results of Toppen's first study (1965a) in which
subjects who received a 25 cent reward for pulling a lever an average of either 500 or
2500 times performed significantly better than subjects who received a 1 cent reward.
First, in Toppen's later study and the present study, the performance of subjects
exposed to higher incentive amounts was consistently higher than the performance of
subjects exposed to lower incentive amounts. Second, Toppen's first study may, in
actuality, have compared the effects of monetary incentives and a guaranteed base pav
rather than the effects of different magnitudes of incentives. Toppen's subjects
received a $3.50 participation fee plus a $.50 transportation fee in addition to the
monetary incentives which consisted of either a 1 or 25 cent reward. It is not clear
that 1 cent, provided on a variable ratio 500 or 2500 reinforcement schedule, was
sufficient to affect performance. That is, a 1 cent incentive may have been comparable
to no incentive and, therefore, the 1 cent incentive condition may have been equivalent
to a $4.00 guaranteed base pay condition. Tlie fact that subjects participated in only
one one-hour session contributes to the possibility that their performance may have
been controlled by the participation fee rather than by the 1 cent incentive. Although
Toppen attempted to reduce the influence of the participation fee by having subjects
participate in two fifteen-minute work periods prior to the thirty-minute experimental
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25
session during w hich they earned the incentives, subject perform ance declined
throughout the experim ental session, suggesting that his procedure w as not entirely
successful. In fact, d uring the last tw enty m inutes o f the experim ental session,
subjects who received 1 cent for pulling the lever an average o f 500 times received an
average o f only 2 cents in incentives and subjects w ho received the 1 cent incentive
for pulling the lever an average o f 2500 tim es did not earn any incentives. Toppen
(1965a) discussed the problem as follows:
when hum an S s have been paid just for com ing into an experimental situation,
it then is necessary to devise some m eans by which to convince the ^ s that
they have earned w hat they have been paid, before presenting the actual test
variables. U nless this is done, one cannot assum e that the test variables are
the on ly fac to rs in flu e n cin g beh av io r, at le a st w hen m agnitude of
reinforcem ent in term s o f further m oney p aym ent is involved. S.s are
otherw ise inclined to feel that they are com m itted in som e way for what they
have been paid, w hen an am ount has been given them regardless of their
perform ance, and secondly, m any are inclined to assum e tiiat they will be
somehow contributing to science or helping E by a particular (larger) kind of
output. It is questionable w hether this kind o f m otivation will hold up for
very long, but in the span o f an hour or tw o in an experim ental situation, the
present findings indicate that these factors have a very im portant effect, (p.
267)
In order to determ ine whether there is a functional relation between the amount
o f incentives and perform ance, the effects o f incentive amounts that actually increase
perform ance m ust be com pared. Therefore, while the results of Toppen's first study
support the effectiveness o f m onetary incentives they m ay not be as relevant for
ascertaining the effect o f different incentive magnitudes on performance.
A s noted by B alcazar, Shupert, D aniels, M aw hinney, and H opkins (1989),
analog studies, such as the prcsent one, can contribute greatly to the field by studying
phenom ena "which are m odeled from , but cannot be effectively or econom ically
evaluated" in a natural w ork setting (p. 35).
M ore specifically, Stonem an and
D ickinson (1989) indicate that analog studies m ay be particularly appropriate when
examining the effects o f compensation systems:
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26
It is often im possible to acquire adequate experim ental control in a natural
setting, particularly in areas as sensitive as em ployee com pensation. Few
companies, and probably few er employees, would perm it pay conditions to be
system atically altered in order to observe the effects on productivity. It would
also be difficult to . . . random ly assign subjects to those groups w ithout
disrupting a com pany's norm al operations, (p. 149)
How ever, analog studies do contain elem ents that m ay lim it the generality of their
results to a real w ork environm ent, and the present study is no exception.
First, subjects in this study were all volunteers and the m oney they earned was
discretionary incom e. T herefore, their performance m ay have been less sensitive to
the amount o f pay they could earn or to the way in which the incentives were related
to performance than the perform ance of nonvolunteer w orkers who m ust rely on their
income to m eet financial obligations.
Second, although subjects were exposed to the m onetary incentive systems for
a longer period of tim e than in previous experimental studies, the total exposure was
still relatively short:
15 forty-five minute sessions.
A lthough the perform ance
differences w ere n o t statistically significant, subjects in the exponential group
com pleted increasingly m ore checks than subjects in the linear group as the study
progressed.
T hus, fu rth e r research with prolonged ex p o su re to the incentive
conditions, the type o f exposure that would occur in a w ork setting, is merited.
T hird, the sessions w ere only forty-five m inutes.
If incentives increase
productivity prim arily by increasing the am ount o f tim e em ployees spend working
(for exam ple, by decreasing the am ount o f time spent socializing and taking breaks)
then the resu lts o f this study m ay not generalize to w ork situations in which
em ployees w ork seven o r eight hours a day. It was clear to subjects in both groups
that the m ore checks they com pleted, the m ore m oney they w ould earn. It is not
difficult to keep up a reasonable w ork pace for forty-five m inutes, particularly when
others are not present to provide distractions. Thus, although subjects were permitted
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27
to take breaks w henever they desired, the isolated w ork environm ent, together with
the short work period m ay have decreased the tendency for subjects to engage in the
types o f off-task behaviors that typically occur in a w ork setting. In future research,
sessions could be lengthened to several hours per day in order to m ore accurately
reflect a typical w ork environm ent
Although the exponential function did not increase productivity m ore quickly
or sustain higher levels o f productivity in the present study, the exponential function
m ay have some practical econom ic advantages when com pared to a linear function. In
the present study, for experim ental com parative purposes, subjects exposed to both
perform ance-pay functions began earning incentives w hen their perform ance was 1
standard deviation below the m ean perform ance o f pilot subjects who were paid a
guaranteed base pay fo r com pleting the checks. Sim ilarly, w hen the exponential
function is im plem ented in actual w ork settings, w orkers typically begin to earn
incentives when their perform ance is 1 standard deviation below the historical mean
perform ance o f em ployees w ho have been receiving a guaranteed hourly wage (W.
A bernathy & K. M cN ally, personal com m unication, 1989). H ow ever, when linear
functions are im plem ented, incentives are usually provided only for above average
performance. Because o f the nature of the function, the exponential function perm its
organizations to provide relatively low incentives for below average perform ance.
Thus, workers w ho perform below average im m ediately begin to earn incentives and
their perform ance m ay com e under the control o f the incentives more quickly and
m ore econom ically than if a linear function were adopted. O n the other hand, at high
levels o f perform ance, organizations w ould pay out considerably m ore m oney for
comparable levels o f perform ance if they adopted an exponential function than if they
adopted a linear function. Future research should exam ine the econom ic trade-off
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28
betw een these tw o perform ance-pay functions as they are typically im plem ented in
business settings.
Finally, the type o f w ork task used in the present study m ay have contributed
to the lack o f perform ance differences betw een the groups. T o date, no study has
exam ined how the type o f task influences the size of productivity increases that occur
when w orkers can earn m onetary incentives. The task used in the present study was a
relatively sim ple task requiring only low levels o f effort. Thus, subjects exposed to
both types o f perform ance-pay functions could easily increase their perfonnance and
earn additional m oney. G reater perform ance differences may be obtained with tasks
requiring m ore effort in both applied and experimental settings.
In sum m ary, the resu lts o f the p resen t study suggest th at exponential
perform ance-pay functions and linear performance-pay functions generate comparable
productivity levels. Further, although productivity w as sim ilar, labor costs were
considerably less for the subjects exposed to the linear function. Future research
should com pare the labor costs for subjects exposed to these functions as they are
typically im plem ented in business settings; that is, w hen subjects exposed to the
e x p o nential function begin earning incentives w hen perform ance is 1 standard
deviation below m ean perform ance and subjects exposed to the linear function begin
earning incentives w hen perform ance exceeds m ean perform ance.
In addition,
replications o f the present study should be conducted with larger numbers o f subjects,
prolonged exposure to the pay functions, longer w ork periods, and ideally, with
employees in an actual work setting.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
APPENDICES
29
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Appendix A
Informed Consent Form
30
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31
Informed Consent for Participation
M r. She-Zeen O ah, a doctoral student in the D epartm ent o f Psychology, is
conducting a rese a rc h study to exam ine how pay m en t system s affect w ork
productivity. F aced w ith declining productivity and increased foreign com petition,
m any business organizations have recently begun to im plem ent em ployee m onetary
incentive system s.
A lthough m onetary incentive system s have been show n to
increase productivity in comparison to hourly pay, few studies have examined the best
way to design such system s. Mr. Oah's study will exam ine the relationship betw een
a particular type o f m onetary incentive system and w ork productivity. The study is
being supported financially by U nion N ational B ank in Little R ock, AR.
T his
organization has im plem ented m onetary incentive system s for alm ost all o f their
em ployees and is interested in determ ining the extent to which these system s are
effective, and has asked us to help them.
If you agree to participate in this study, you w ill be asked to attend 15 to 20
sessions, each o f w hich w ill last approxim ately one hour. Three sessions w ill be
scheduled each w eek. They w ill be scheduled at tim es that are convenient for you.
The sessions w ill be conducted in W ood H all, Room 272A. During each session you
will be asked to perform a w ork task that sim ulates the jo b o f a p roof operator at a
bank. For the w ork task, bank checks written in differing am ounts will be displayed
on a com puter screen. Y ou will be asked to key in the am ount shown on the checks
using the com puter keyboard. The am ount o f pay that you receive will depend upon
the num ber o f checks that you correctly com plete. Generally, you can expect to earn
from $2.00 to $4.00 p e r session, although the specific am ount that you receive will
depend upon your productivity. You will be paid weekly by check. You will be paid
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32
on Mondays, or if you do not have a session scheduled on Monday, your first session
of the week.
Your participation in this study is completely voluntary and your willingness
or your lack of desire to participate will not affect your course grades. If you agree to
participate, you may withdraw from the study at any time. However, if you do
withdraw before completing all 15 to 20 sessions we will not be able to use your data.
Therefore, please do not volunteer unless you are sure that you will be able to
complete all of the sessions.
When the results of this study are publicly presented (e.g., in Mr. Oah's
dissertation, in an oral presentation at a professional meeting or published in a
professional journal), your performance data will be identified by number, not by
your name in order to insure your anonymity. If you indicate that you would like to
receive the results of the study, we will send you a final report. Due to the large
number of subjects who will be participating, the final report will not be available until
the spring of 1990. If you would like to participate in this research study, please sign
the attached consent form and give it to the experimenter. If you have any questions
regarding this research, feel free to ask the experimenter or call Mr. Oah at 387-6392
or me at 344-7914.
Dr. Alyce M. Dickinson
Assistant Professor
Department of Psychology
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33
I w ould like to participate in M r. Oah's research study that will exam ine the
effects o f pay system s on w ork productivity.
I un d erstan d that (1) my
participation is voluntary and w ill not affect m y co u rse grades, (2) I may
w ithdraw from the study at any tim e, and (3) my perform ance data will remain
confidential in public presentations.
Nam e:
______________________________________
(PLEA SE PRINT)
Signature: ___________________ :_______________
Date:
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Appendix B
W estern M ichigan U niversity's
Human Subjects Institutional Review Board Approval
34
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
<a'ArrazCQ Michigan 49CC8-;8S9
35
WESTERN M i c h i g a n U n iv e r s it é
Date:
July 31,1989
To:
She-Zeen Oah
From: Mary Anne Bunda, Chair
M iU y
This letter will serve as confirmation that your research protocol, "The Effec ts of Linear and
Accelerated Performance-pay Functions on Work Productivity in Individual Monetary incentive
Systems" has been aooroved by the HSIRB. The conditions and duration of this approval are
specified in the Policies of Western Michigan University. You may now begin to implement the
research as described in the approval application.
The Board wishes you success in the pursuit of your research gcals.
AC:
A. Dickinson, Psychology Department
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Appendix C
Payment Schedule for the Exponential
Performance-Pay Function
36
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37
Payment Schedule for the Exponential Function
PAYMENT SC1EDULE
1
11
Amount
Amount
Amount
Amount
Amount!
# of cK
#of ck
#of ck
#of ck
#of ck
490 2.00 530 2.11 570 2.30 610 2.55 650 2.85
491 2.00 531 2.11 571 2.30 611 2.56 651 2.861
492 2.00 532 2.11 572 2.31 612 2.57 652 2.87
493 2.00 533 2.12 573 2.32 613 2.58 653 2.88
494 2.00 534 2.12 574 2.32 614 2.58 654 2.89
495 2.00 535 2.13 575 2.33 615r 2.59 655 2.89
496 2.01 536 2.13 576 2.34 616 2.60 656 2.90
497 2.01 537 2.14 577 2.34 617 2.60 657 2.91
498 2.01 538 2.14 578 2.35 618 2.61 658 2.92
499 2.01 539 2.14 579 2.35 619 2.62 659 2.93
500 2.01 540 2.15 580 2.36 620 2.62 660 2 .93 I
501 2.02 541 2.15 581 2.37 621 2.63 661 2 .94 I
502 2.02 542 2.16 582 2.37 622 2.64 662 2 .95 I
503 2.02 543 2.16 583 2.38 623 2.65 663 2.961
504 2.02 544 2.17 584 2.38 624 2.65 664 2.97
505 2.02 545 2.17 585 2.39 625 2,63 665 2.98
506 2.03 546 2.18 536 2.40 626 2.67 666 2.981
507 2.03 547 2.18 587 2.40 627 2.68 667 2 .9 9 I
508 2.03 548 2.19 588 2.41 628 2.68 668 3 .O0 I
509 2.04 549r 2.19 589 2.42 629 2.70 669 3.Oil
510 2.04 550 2.20 590 2.42 630 2.70 670 3 .02 I
51 1 2.04 551 2.20 591 2.43 631 2.71 671 3.03
512 2.04 552 2.21 592 2.43 632 2.71 672 3.03
513 2.05 553 2.21 593 2.44 633 2.72 673 3.041
514 2.05 554 2.22 594 2.45 634 2.73 674 3.051
515 2.05 555 2.22 595 2.45 635 2.74 675 3.061
516 2.06 556 2.23 596 2.46 636 2.75 676 3.07
517 2.06 557 2.23 597 2.47 637 2.75 677 3.08
518 2.06 558 2.24 598 2.47 638 2.76 678 3.09
519 2.07 559 2.24 599 2.48 639 2.77 679 3.10
520 2.07 560r 2.25 600 2.49 640 2.77 680 3.10
521 2.07 561 2.25 601 2.49 641 2.73 681 3.11
522 2.08 562 2.26 602 2.50 642 2.79 632 3.121
523 2.08 563 2.26 603 2.51 643 2.80 683 3. I 3I
524 2.08 564 2.27 604 2.51 644 2.81 684 3.141
525 2.09 565 2.27 605 2.52 645 2.81 685 3 .is!
526 2.09 566 2.23 606 2.53 646 2.82 686 3.161
527 2.09 567 2.28 607 2.53 647 2.83 687 3.171
528 2.10 568 2.29 608 2.54 648 2.84 688 3.1 71
529 2.10 569 2.30 609 2.55 649 2.85 689l 3.181
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
38
Payment Schedule-Continued
Amount
#of ck
690
691
692
693
694
695
696
697
698
699
700
701
702
703
704
705
706
707
708
709
71 0
71 1
712
713
714
715
71 6
717
718
719
720
721
722
723
724
725
726
727
728
729
3.191
3.20
3.21
3.22
3.23
3.24
3.25
3.26
3.26
3.27
3.281
3.29
3.30
3.311
3.32
3.33
3.34
3.35
3.361
3.371
3.381
3.381
3.391
3.401
3.41
3.42
3.431
3.441
3.451
3.461
3.47
3.43
3.49
3.50
3.51
3.52
3.53
3.54
3.;
3.56
Amount
Amouni
Amount
Amouni
#of ckj
#of ck
#of ck
3.57 770 3.971 810 4.41 8501 4.88
4 .4 2I 851 4.89
3.58 771 3.991
4.441
852 4.901
3.59 772 4.001
4.451 853 4.921
3.60 773 4.01
4.461 854 4.931
3.61 774 4.02
4.47 8551 4.94
4.03
3.62 775
4.04
4.48 856 4.961
3.63 776
4.49 857 4.971
3.64 777 4.05
4.50 358 4.98
3.65 778 4.06
4.07
4.52 859 4.991
779
3.66
3.57 780 4.08
4.53 860 5 .OOI
4.54
4.09
3.68 781
4.55
3.59 782 4.10
4.11
4.56
3 . 70I 783
784
4.57
4.12
3.71
4.14
8251
4.53
3.721 785
3.73 786 4.15 8261 4.601
747 3.74 787 4.16 827 4 . 6 I I
748 3.7511 788 4.17 828 4.62!
7491 3.76 789 4.18 829 4.631
750l 3.7711 790i 4.191 830 4.641
751|. 3.7811 791 4 .20I 831 4.651
4.21! 832 4.671
7521 3.79
753 3.800 793 4 .22 ! 833 4.681
754 3.81 794 4.231 834 4.691
755 3.82 795 4.251 835 4.701
7561 3.83 796 4.261 âÏÏël 4.71
757 3.84 797 4.271 8371 4 72
7581 3.85 798 4.2811 8381 4.741
759 3.86 799 4.291 8391 4.751
7601 3.87 300 4.301 840 4.761
761 3.88 801 4.3111 841 4.771
762 3.89 802 4.321 842 4.781
763 3.90 803 4.33ir 843 4.801
764 3.911 804 4.351 844 4 . 8 I I
7651 3.9211 8051 4.361 845 4.82!
!6l 4.831
766 3.93 8 0 61
767 3.94 807 4.38li 8471 4.8411
7G a 3.95m 808 4.391 8481 4.860
769 3L960 809 4 . 4 O I I 849l 4.8711
H . 0 / II
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Appendix D
Payment Schedule for the Linear
Performance-Pay Function
39
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
40
Payment Schedule for the Linear Function
PAYMENT SCHEDULE
# of ck
490
491
492
493
494
495
496
497
498
499
500
501
502
503
504
505
506
507
508
509
510
511
512
513
514
515
516
517
518
519
520
521
522
523
524
525
526
527
528
529
1
1
1
Amount!
Amouni
Amount
Amouni
1Amount!
#of ck
#of ck
#of ck
#of ck
2.00 530 2.16 570 2.32 610 2.49 650 2.651
2.00 531 2.17 571 2.33 611 2.49 651 2.65
2.01 532 2.17 572 2.33 612 2.50 652 2.66
2.01 533 2.17 573 2.34 613 2.50 653 2.66
2.02 534 2.18 574 2.34 614 2.50 654 2.66
2.02 535 2.18 575 2.34 615 2.5l| 655 2.67
2.02 536 2.19 576 2.35 616 2.51 656 2.67
2.03 537 2.19 577 2.35 617 2.51 657 2.68
2.03 538 2.19 578 2.36 618 2.52 658 2.681
2.04 539 2.20 579 2.36 619 2.52 659 2.691
2.04 540 2.20 580 2.36 620 2.53 660 2.69!
2.04 541 2.21 581 2.37 621 2.53 6 6 1 I 2 .7 0 I
2.05 542 2.21 582 2.37 622 2 .5 4 I 662 2 .7 0 I
2.05 543 2.21 583 2.38 623 2.54 663 2.70
2.06 544 2.22 584 2.38 624 2.54 664 2.71
2.06 545 2.22 585 2.39 625 2 .5 5 I 665 2.71
2.06 546 2.23 586 2.39 626 2.55 666 2.71
2.07 547 2.23 587 2.39 627 2.561 667 2.72
2.07 548 2.24 588 2.40 628 2.561 668 2.72
2.08 549 2.24 589 2.40 629 2.561 669 2.731
2.08 550 2.24 590 2.41 630 2.57 670 2.73
2.09 551 2.25 591 2.41 631 2.57 671 2.73
2.09 552 2.25 592 2.41 632 2.58i 672 2.741
2.09 553 2.26 593 2.42 633 2.58 673 2.741
2.10 554 2.26 594 2.42 634 2.58 674 2.75
2.10 555 2.26 595 2.43 635 2.59 675 2 .7 5 I
2.1 1 556 2.27 596 2.43 636 2.59 676 2.75
2.11 557 2.27 597 2.43 637 2.50 677 2.761
2.11 558 2.28 598 2.44 638 2.50 678 2.76
2.18 559 2.28 599 2.44 639 2.60 6 7 9 ! 2.771
2.12 560 2.28 600 2.45 640 2.61 680 2.771
2.13 561 2.29 601 2.45 641 2.61 681 2.771
2.13 562 2.29 602 2.45 642 2.62 682 2.78
2.13 563 2.30 603 2.46 643 2.62 683 2.781
2.14 564 2.30 604 2.46 644 2.62 684 2.791
2.14 565 2.30 605 2.47 645 2.63 6851 2.791
2.15 566 2.31 606 2.47 646 2.63 6861 2 .7 9 I
2.15 567 2.31 607 2.47 647 2.67 6871 2 .8 OI
2.15 568 2.32 608 2.48 648 2.64 688 2 .8 OI
2.16 569 2.32 609 2.48 649 2.64 6891 2.811
Reproduced with permission o f the copyright owner. Further reproduction prohibited without permission.
41
Payment Schedule-Continued
1
1
j
1
I
1
Amouni
Amouni
Amount
Amountl
Amounfl
#of ck
1#of ck
#of ck
#of ck
#of ck
690 2.81 730 2.97 770 3.14 810 3.30 850 3.46
691 2.81 731 2.98 771 3.14 811 3.30 851 3.461
692 2.82 732 2.98 772 3.14 812 3.31 852 3.47
693 2.82 733 2.99 773 3.15 813 3.31 853 3.47
694 2.83 734 2.99 774 3.15 814 3.31 854 3.48
695 2.83 735 2.99 775 3.16 815 3.32 855 3.48
696 2.84 736 3.00 776 3.16 816 3.32 856 3.48
697 2.84 73^ 3.00 777 3.16 817 3.33 857 3 .4 9 I
698 2.84 738 3.01 778 3.17 818 3.33 858 3.491
699 2.85 739 3.01 779 3.17 819 3.33 859 3.sol
700 2.85 740 3.01 780 3.18 820 3.34 860 3 .5 0 I
701 2.86 741 3.02 781 3.18 821 3.34
702 2.86 742 3.02 782 3.18 322 3.35
1
703 2.86 743 3.03 783 3.19 823 3.35
1
704 2.87 744 3.03 784 3.19 824 3.35l
705 2.87 745 3.03 785 3.20 825 3.36
706 2.88 746 3.04 786 3.20 826 3.36
707 2.88 747 3.04 787 3.20 827 3.371
708 2.88 748 3.05 788 3.21 828 3.37
709 2.89 749 3.05 789 3.21 829 3.37
710 2.89 750 3.05 790 3.22 830 3.38
71 1 2.90 751 3.06 791 3.22 831 3.381
712 2.90 752 3.06 792 3.22 832 3.391
713 2.90 753 3.07 793 3.23 833 3.391
714 2.91 754 3.07 794 3.23 834 3.391
715 2.91 755 3.07 795 3.27 835 3.40|
716 2.92 756 3.08 796 3.24 836 3.40j
717 2.92 757 3.08 797 3.24 837 3.41
718 2.92 758 3.09 798 3.25 838 3.41
719 2.93 759 3.09 799 3.25 839 3.41
720 2.93 760 3.09 800 3.26 840 3.42
721 2.94 761 3.10 801 3.26 841 3.42
722 2.94 762 3.10 802 3.26 842 3.43
723 2.94 763 3.11 803 3.27 843 3.43
724 2.95 764 3.11 804 3.27 844 3.44
725 2.95 765 3.11 805 3.28 845 3.44
726 2.96 766 3.12 806 3.28 846 3.44
727 2.96 787 3.12 807 3.29 847 3.45
728 2.96 768 3.13 808 3.29 848 3.45
729 2.97 769 3.13 809 3.29 349 3.46
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Appendix E
Instructions to Subjects
42
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
43
T he purpose o f th is research project is to study the effects o f paym ent
system s. D uring each session I will ask you to type num bers using the com puter
keyboard. The sessions w ill be tim ed and will last for 45 minutes. The com puter will
autom atically stop you w hen the tim e is up. During each session what you have to do
is to type the check's cash value in the blank box below the check. T he num bers you
type m ust be the same as the num ber on the check. You can use eith er the m ain
keyboard or the num eric keypad.
A nd you have to press the R E T U R N key or
EN TER key when you com plete each check. Then you will see another cash value on
the check and the procedure will be repeated.
If you do not type the cash value correctly, the com puter produces a "BEEP"
sound after the RETU R N or E N TER key has been pressed. Then you w ill have to
type the correct cash value and press the R ETU R N or EN TER key again. O nce the
co rrect cash value has been typed, and the R ETU R N or EN TER K E Y pressed,
another check will be presented. Then, you can continue. If you find a m istake
before pressing the R E TU R N or EN TER key, you can correct the m istake using the
BA CK SPA CE key. D o you have any questions?
You don't have to type the decim al point betw een num bers. F o r exam ple,
when the cash value on the check is 234.53, you don't have to type the point between
4 and 5. Simply type 23453.
If you are interested in how m any checks you have com pleted, you have to
m ove the com puter "pointer" (a small arrow on the screen) to the "N um ber Complete"
box and click on it using the com puter "m ouse". The com puter w ill show you the
num ber o f checks com pleted. In order to go back to work, you have to click "OK "
box. Please don't touch anytiting else. T hat m ight cause system error.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
44
If, during the session, you w ish to take a break or to go to the restroom , you
m ay leave your w ork station w henever you w ant to. Sm oking is only allow ed in the
entry w ay o f W ood Hall. Y ou can also turn on the radio if you wish.
A fter each session com pleted, I will record and graph the num ber o f checks
com pleted. You m ay look at this graph at any time before and/or after each session.
A ttached to this graph will be a "Paym ent Schedule" that will let you know how much
you will be paid for the num ber o f checks you completed. You m ay also look at this
paym ent schedule at any tim e before and/or after each session. A t the end o f each
session, 1 will tell you how m uch you have earned. You will be paid w eekly in cash
each M onday oi the first day o f the w eek that you attend a session. A t that time, you
will be asked to sign a receipt form that we need for accounting purposes. Before we
start, 1 would like you to practice for 5 minutes.
W e are now ready to get you started. If you have any problem s or questions 1
w ill be right outside this room .
W hen the 45 m inutes are up (w hen the check
disappears from the com puter screen), notify m e that the session is over. Then I will
see how many checks you com pleted and determine the amount o f m oney you earned.
F or subjects in the accelerated pav condition
Y ou will be paid a base w age o f $2.00 per session fo r correctly com pleting
from 1 to 490 checks. W hen you com plete m ore than 490 checks, you will earn
additional m oney per each check com pleted above 490 checks.
H ow ever, the
paym ent schedule is arranged so that the m ore checks you com plete, the m ore each
com pleted check is w orth. F or exam ple, if you increase the num ber o f com pleted
ch eck s from 500 to 600, y o u r earnings increase from $2.01 to $2.49 ($.48
increm ent). But, if you increase the num ber o f com pleted checks from 760 to 860,
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
45
your earnings increase from $3.87 to $5.00 ($1.13 increment). Therefore, the more
checks you complete, the more you can earn per check.
For subjects in the linear pay condition
You will be paid a base wage of $2.00 per session for correctly completing
from 1 to 490 checks.
For each check completed above 490, you will earn
approximately $0.(X)4 per check, or in other words, 0.4 cents per check. So the more
checks you complete during the session, the more money you will make.
Do you have any questions before you get started? Are you ready? Now you
can start.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Appendix F
Graphs of the Performance of Individual Subjects
46
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
47
"O
B
0
1
o
0
10
0
"o
1
Ë
3
Z
950
900
Subject 2 (Exponential)
850
800
750
700
650
600
550
500
450 H
400
I ' M '
I ' I " ■ I ■ I"""" I
2 4 6 8 10 12 14
Sessions
950 -]
900Subject 8 (Exponential)
•o 850 2
2 800 E
750
u> 700 =
■g
m
O 650 ' J
“S 600 550
E
3
Z
500H
450
400
6 8 10 12 14
Sessions
o
Ü
1“ ’ " 1
■
I
■
I
■
I
900
850 Subject 6 (Exponential)
800
750
700650600550500
0 2 4 6 8 101214
Sessions
950 -I
900-
Subject 14 (Exponential)
800750 700
650 600 550 500450 400
0 2 4 0 8 101214
Sessions
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
48
950
950 900 -
Subject 15 (Exponential)
900
Subject 23 (Exponential)
850 -
850 -
B
800 -
800 -
E
o
Ü
750 -
750
700 -
700
1
1
O
650 -
650
'o
600 -
600
1
550 -
550
500 -
500
450
450
3
z
400
1' r
2 4
I ' 1 '' 1 ' I
8
10
12
400
0
14
2
4
S e ssio n s
6
8
1 0 1 2 1 4
S essio n s
950 -1
950 -,
900
900 Subject 25 (Exponential)
■o
B
B
850
850
800
800
750
750
700 -
700
0
"o
650 -
650
600 -
600 -
1
2
550 ■
550
500 -
500
450
450
t
O
tn
iS
Subject 27 (Exponential)
400
I '
8
S essio n s
I
10
'
I '
12
I
14
I
400
0
2
4
6
8
1 0 1 2 1 4
S essio n s
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
49
950
900
Subject 28 (Exponential)
•o 8502
2 800
go 750
a
Ü 700 4
O S50
600
Ë
E 550H
500
450H
400 T ' i ■ I ■ I I I -« —r - , - 1 -I
2 4 6 8 10 12 14
Sessions
950
900
Subject 36 (Exponential)
850
800
750
700
650600550500
450400
0 2 4 6 8 101214
Sessions
950
900Subject 37 (Exponential)
T3 850 ®
E 800 Q.
E
CJ 750
(A
-g 700 4
<9
£ 650
O
600 4
Ë
550
E
3
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500450 400 "I
—r- ' -I "
6
8 10 12 14
Sessions
950n
900Subject 41 (Exponential)
850800750700
650600
550
500
450 400
0 2 4 6 8 10 12 14
Sessions
(A
(9
/
o
1
'
I
'
I
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
50
950 1
950 -,
900
900 -
850
850 -
800 -
800 -
Subject 47 (Exponential)
•a
2
®
E
0
Ü
1
sz
O
s
E
3
Z
750 -
750 -
Subject 44 (Exponential)
700
700 -
650
650 -
600
600 -
550
550 ■
500
500 -
450
450 -
400
" I '■ I
2
4
'
I •' "I
6
■ I- '- I
8
10
I
12
400
14
0
2
4
S essio n s
6
8
10
12
14
S essio n s
950 -
950 -I
900 -
900 -
■o
850
850 -
2
800
800 -
o
O
750
750 -
U
5
o
700
700 -
Subject 54 (Exponential)
2
E
E
3
Z
650
650 Subject 49 (Exponential)
600
600 ■
550
550 -
500
500 -
450 H
450 -
400
■ I
6
8
S essio n s
10
■ -I
12
'
I
14
400
0
2
4
6
8
1 0 1 2 1 4
S essio n s
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
51
950 -I
950
900
900 -
Subject 59 (Exponential)
Subject 55 (Exponential)
850-
850 -
800-
800 -
750 -
750 -
700
700
1
ü
650 -
650 -
'o
600 -
600 -
550 -
550 -
500
500 -
450 H
450 -
1e
E
O
o
I
3
Z
400
-r
I
4
8
'
1 ' ' "I
10
'
1
12
400
4
14
950
950 -
•o
850 -
2
800 -
800 ■
E
o
750 -
750
700 -
700
550 -
650
600 -
600
550 -
550
500
500
450
450 -
2
5
E
3
Z
400
14
Subject 64 (Exponential)
850
<D
O
12
-I
Subject 62 (Exponentiai)
(A
10
900 -
900 -
ü
8
S ession s
S essio n s
a.
6
I
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I"
I
6
8
10
12
S essio n s
'
1....
14
400
4
6
8
10
12
14
Sessions
Reproduced with permission o f the copyright owner. Further reproduction prohibited without permission.
52
950
900 -
■o
2
2
E
ü
I
O
I3
Z
950 -I
900
Subject 7 (Linear)
Subject 10 (Linear)
850 -
850
800 -
800 -
750 -
750 -
700 -
700 -
650-
650 -
600
600 -
550 -
550 -
500 -
500 -
450
450 -
400
400
6
8
10
12
14
0
2
4
S essio n s
900 Subject 20 (Linear)
Subject 19 (Linear)
*o
o
850 -
850 -
CD
800 -
800 -
750 -
750 -
700 -
700 -
650 -
650 -
600 -
600 -
550 -
550 -
500 -
500 -
450 -
4 50 -
1o
o£
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0
13
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1 0 1 2 1 4
950
900
Q.
8
S essio n s
950 -I
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6
4 00
400
6
8
S essio n s
10
12
14
0
2
4
6
8
1 0 1 2 1 4
S essio n s
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
53
950
950
900
900 ■
Subject 21 (Linear)
Subject 26 (Linear)
850
850 -
800
800 -
I
750
750
I
700
700
650
650
600
600 *
550
550 -
500
500 -
450 H
450 -
I
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a,
o
E
E
3
Z
400
—r
2
400
8
10
12
14
0
2
4
S essio n s
900 Subject 29 (Linear)
Subject 30 (Linear)
850
850 -
800
800 -
Ü
750
750 -
U
(D
o
700
700 -
650
650 -
600
800 -
550
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