Examining the Tradeoff between Fixed Pay and Performance-related Pay: A Choice Experiment Approach

Junyi Shen, Kazuhito Ogawa () and Hiromasa Takahashi

No DP2014-01, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: Previous investigations on performance-related pay have mainly analyzed its relationships with earnings, productivity, and job satisfaction. Less attention has been devoted to the investigations of individuals’ preferences for the performance-related payment system per se and consequently the tradeoff between fixed pay and performance-related pay. In this paper, we first use a choice experiment approach to investigate the tradeoff between fixed pay and performance-related pay, and then link the tradeoff for each individual with their risk preferences. Our main results indicate that individuals’ preferences for the payment system per se and the magnitude of tradeoffs between fixed pay and performance pay are different according to their risk preferences.

Keywords: Fixed pay; Performance-related pay; Choice experiment; Risk preference (search for similar items in EconPapers)
JEL-codes: C35 J33 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2014-01
New Economics Papers: this item is included in nep-dcm, nep-hrm and nep-lab
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Examining the Tradeoff Between Fixed Pay and Performance-Related Pay: A Choice Experiment Approach (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:dp2014-01

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