Name
The Combined Impact of Relative Performance Information and Financial Incentives on Workers’ Effort and Performance in a Multi-task Setting
Date & Time
Sunday, July 5, 2026
Description
This study experimentally examines the combined impact of relative performance information (RPI) and financial incentives on workers’ effort and performance in a multi-task environment. When individuals are required to undertake multiple tasks, they not only decide how much effort to exert, but also how to allocate that effort across their respective tasks (Holmstrom and Milgrom 1991). Organizational preferences regarding effort allocation may not be complied with in situations where the ease of measuring and rewarding performance of those tasks varies. Financial incentives and social incentives have both been found at times to either alleviate or exacerbate the problem. An experiment is conducted to investigate how RPI (which relies on social incentives) and performance-based financial incentives interact to affect performance across two real-effort tasks. The hypothesis that performance-based pay combined with RPI leads to increased performance is unsupported.
Keywords
relative performance information, incentives, real effort, multi-tasking
Theme
MANAGEMENT ACCOUNTING
Author 1
Nicole Ang