Bonus payments and reference point violations

• Axel Ockenfels ^[1] ; Dirk Sliwka ^[1] ; Peter Werner ^[1]
  1. [1] University of Cologne

     University of Cologne

     Kreisfreie Stadt Köln, Alemania

     
• Localización: Management science: journal of the Institute for operations research and the management sciences, ISSN 0025-1909, Vol. 61, Nº. 7, 2015, págs. 1496-1513
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • We investigate how bonus payments affect the satisfaction and performance of managers in a large multinational company. We find that falling behind a natural reference standard for a fair bonus payment (a “reference point violation”) reduces satisfaction and subsequent performance. The effects are mitigated if information about one’s relative standing toward the reference point is withheld. A model and a laboratory experiment provide complementary insights and additional robustness checks.