Bonus Payments and Reference Point Violations

We investigate how bonus payments affect satisfaction and performance of managers in a large, multinational company. We find that falling behind a naturally occurring reference point for bonus comparisons reduces satisfaction and subsequent performance. The effects tend to be mitigated if information about one's relative standing towards the reference point is withheld.

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Year of publication:	2010-02
Authors:	Ockenfels, Axel ; Sliwka, Dirk ; Werner, Peter
Institutions:	Institute for the Study of Labor (IZA)
Subject:	reference points \| incentives \| bonus payments \| job satisfaction \| job performance

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Extent:	application/pdf
Series:	IZA Discussion Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 4795 31 pages
Classification:	D03 - Behavioral Economics; Underlying Principles ; M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs)
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008592860