Knowing That You Know: Incentive Effects of Relative Performance Disclosure

54 Pages Posted: 17 Feb 2021 Last revised: 10 Mar 2021

See all articles by Pablo Casas-Arce

Pablo Casas-Arce

Arizona State University (ASU) - W.P. Carey School of Business

Carolyn Deller

University of Pennsylvania - The Wharton School

Francisco de Asis Martinez-Jerez

University of Notre Dame - Department of Accountancy; Cornell University

Jose Manuel Narciso

affiliation not provided to SSRN

Date Written: February 16, 2021

Abstract

This paper studies differential employee responses to the public disclosure of individual performance information throughout an organization. We argue that, to the extent that employees care about their colleagues’ perceptions of their productivity, public disclosure will increase motivation. Moreover, the effect should be stronger for employees whose colleagues expect them to have higher performance. We obtained data from a bank that transitioned from private to public disclosure of employee rankings and, consistent with our hypothesis, find heterogeneity in employee responses to public disclosure. Employees with a history of poor performance increase their output more than past good performers when rankings become public. Additionally, more highly educated employees react more strongly to the change. However, contrary to the literature that finds gender differences in competitive environments, we do not find systematic differences in the response to public disclosure on this dimension. Overall, the results suggest that public disclosure is an important dimension to consider when designing a compensation system.

Keywords: Tournaments; Relative performance information; Public disclosure

JEL Classification: M41, M52

Suggested Citation

Casas-Arce, Pablo and Deller, Carolyn and Martinez-Jerez, Francisco de Asis and Narciso, Jose Manuel, Knowing That You Know: Incentive Effects of Relative Performance Disclosure (February 16, 2021). Available at SSRN: https://ssrn.com/abstract=3787524 or http://dx.doi.org/10.2139/ssrn.3787524

Pablo Casas-Arce

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

Carolyn Deller (Contact Author)

University of Pennsylvania - The Wharton School ( email )

1311 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6365
United States

Francisco de Asis Martinez-Jerez

University of Notre Dame - Department of Accountancy ( email )

Mendoza College of Business
Notre Dame, IN 46556-5646
United States

Cornell University ( email )

Ithaca, NY 14853
United States

Jose Manuel Narciso

affiliation not provided to SSRN

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
74
Abstract Views
421
rank
383,506
PlumX Metrics