This paper explores different compensation structures on employee production and effort, challenging neoclassical economic assumptions about human behavior. I theorize profit sharing to be the pay scheme to best motivate effort. I run an experiment with 106 participants completing real-effort tasks with 8 treatments. Each treatment has a different payment plan (salary [control], piece wage, ESOP, and profit sharing) with participants choosing their real-effort task or being randomly assigned. The regression analyses provide evidence contrary to the neoclassical economic assumptions, as piece wage pay schemes performed worse than the other treatments. These results open the door for more research emphasizing group-sharing payment schemes on effort, and the role for participatory business practices in productivity.
Parker, Noah, "The Effects of Compensation Structures on Employee Productivity: A View from the Lab" (2018). Senior Independent Study Theses. Paper 7881.
Business Administration, Management, and Operations
Bachelor of Arts
Senior Independent Study Thesis
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