Performance Effects of Relative Performance Information and Mutual Monitoring

• In Event: 1.03 Relative Performance Information

Abstract

This study investigates the effects of relative performance information and mutual monitoring on effort and performance. Specifically, I use an experiment to investigate the effects of relative performance information (present or absent) and mutual monitoring or peer effort information (present or absent) on effort and performance of workers compensated with an individual piece-rate contract. Prior accounting research on Social Comparison Theory shows that providing relative performance information to workers who cannot observe peer effort increases their effort and performance by instigating competition. Following Social Comparison Theory, I predict and find that in the absence of relative performance information, workers who observe peer effort achieve higher performance than workers that do not observe peer effort. I also predict and find that providing relative performance information in the absence of mutual monitoring increases performance to a greater extent than providing relative performance information in the presence of mutual monitoring, highlighting the limited benefit of providing relative performance information to workers who can observe peer effort.

Author

• Dimitri Yatsenko, University of Wisconsin-Madison