TY  - BOOK
AU  - Pierce,Lamar
AU  - Rees-Jones,Alex
AU  - Blank,Charlotte
ED  - National Bureau of Economic Research.
TI  - The Negative Consequences of Loss-Framed Performance Incentives
T2  - NBER working paper series
PY  - 2020///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - January 2020; Hardcopy version available to institutional subscribers
N2  - Behavioral economists have proposed that incentive contracts result in higher productivity when bonuses are "loss framed"--prepaid then clawed back if targets are unmet. We test this claim in a large-scale field experiment. Holding financial incentives fixed, we randomized the pre- or post-payment of sales bonuses at 294 car dealerships. Prepayment was estimated to reduce sales by 5%, generating a revenue loss of $45 million over 4 months. We document, both empirically and theoretically, that negative effects of loss framing can arise due to an increase in incentives for "gaming" behaviors. Based on these claims, we reassess the common wisdom regarding the desirability of loss framing
UR  - https://www.nber.org/papers/w26619
UR  - http://dx.doi.org/10.3386/w26619
ER  -