How Relative Performance Information Affects Exploration-exploitation Decisions

2021 ◽  
Author(s):  
Andrew H. Newman ◽  
Bryan R. Stikeleather ◽  
Nathan J. Waddoups
Keyword(s):  
Performance Feedback ◽  
Relative Performance ◽  
Performance Information ◽  
Feedback Systems ◽  
Alternative Strategies ◽  
High Performing ◽  
Expected Outcome ◽  
Relative Performance Information ◽  
Informational Effect ◽  
Exploration Exploitation

Employees often make recurring decisions that entail deciding whether to continue using a “status quo” strategy that yields reliable results or try an alternative strategy of unknown efficacy. Via an experiment, we study how relative performance information (RPI)  influences this choice and its expected outcome. We theorize and find that RPI has both a social motivational effect that increases employees’ propensity to explore alternative strategies and an informational effect that helps them determine whether exploring alternative strategies will likely help or harm their performance (i.e., it conveys decision-facilitating benefits). Likewise, as predicted, we also find that RPI’s decision-facilitating benefit occurs more strongly among low- versus high-performing employees. Our study helps inform employers about the decision-facilitating implications of incorporating RPI into their performance feedback systems.

The Effects of Relative Performance Information and Framed Information Systems Feedback on Performance in a Production Task

2011 ◽  
Vol 25 (1) ◽  
pp. 159-184 ◽  
Author(s):  
Uday S. Murthy ◽  
Brad A. Schafer
Keyword(s):  
Information Systems ◽  
Performance Feedback ◽  
Relative Performance ◽  
Performance Information ◽  
Accounting Information Systems ◽  
High Performing ◽  
Performance Improvements ◽  
Relative Performance Information ◽  
Improved Performance ◽  
Feedback Framing

ABSTRACT: Information systems’ reports typically contain quantitative feedback such as monetary values or the number of units sold or produced. We investigate if providing relative performance information (RPI) feedback and framing the feedback in a positive (good job) or negative (poor job) manner induces performance improvements in a repetitive task. We also investigate if feedback framing interacts with performer level, such that framed feedback has a differential effect for low performers, compared to average and high performers. An experiment was conducted using a 3 × 4 × 2 factorial design, crossing feedback framing (positive, negative, or control), relative performance information (no RPI, rank-ordered RPI, percent RPI in first session, percent RPI in second session), and contract type (fixed or variable), using 289 student participants assuming the role of production workers. Results revealed a significant positive effect of providing relative performance feedback and positively framed feedback. The results also indicate an interaction between worker performance level and feedback framing, such that low-performing workers improved performance in response to positive feedback significantly more than average and high-performing workers. Feedback framing did not have an incremental effect over relative performance feedback. These results have implications for the design of accounting information systems in terms of the type of feedback provided to workers.

The Effect of Relative Performance Information on Performance and Effort Allocation in a Multi-Task Environment

2012 ◽  
Vol 88 (2) ◽  
pp. 553-575 ◽  
Author(s):  
R. Lynn Hannan ◽  
Gregory P. McPhee ◽  
Andrew H. Newman ◽  
Ivo D. Tafkov
Keyword(s):  
Employee Performance ◽  
Relative Performance ◽  
Data Availability ◽  
Task Environment ◽  
Performance Information ◽  
Behavioral Theories ◽  
The Social ◽  
Distortion Effect ◽  
Relative Performance Information ◽  
Motivation Effect

ABSTRACT This study investigates how relative performance information (RPI) affects employee performance and allocation of effort across tasks in a multi-task environment. Based on behavioral theories, we predict that the social comparison process inherent in RPI induces both a motivation effect that results in increased effort as well as an effort distortion effect that results in the distortion of effort allocations across tasks away from the firm-preferred allocations. We also predict that both effects are magnified when the RPI is public compared to private. We argue that although the motivation effect will generally benefit performance, the effort distortion effect may be detrimental to performance. We design an experiment that isolates these two effects. Consistent with our predictions, we find that RPI induces both motivation and effort distortion effects and that both effects are magnified when the RPI is public rather than private. Although the motivation effect increases performance, we demonstrate that the effort distortion effect can decrease performance. By isolating the motivation and effort distortion effects, our study provides insights into the costs and benefits of RPI in a multi-task environment. As such, it informs accountants regarding the design of information systems and when tasks should be aggregated or disaggregated across employees. Data Availability: Data are available from the authors upon request.

I Know Something You Don't Know: The Effect of Relative Performance Information and Individual Performance Incentives on Knowledge Sharing

2018 ◽  
Vol 31 (2) ◽  
pp. 19-35 ◽  
Author(s):  
Leslie Berger ◽  
Krista Fiolleau ◽  
Carolyn MacTavish
Keyword(s):  
Knowledge Sharing ◽  
Interactive Effect ◽  
Individual Performance ◽  
Relative Performance ◽  
Performance Information ◽  
Performance Incentives ◽  
Passive Behavior ◽  
Knowledge Sharing Behavior ◽  
Relative Performance Information ◽  
Sharing Behavior

ABSTRACT When employees share knowledge with their colleagues, the efficiency of the colleagues' performance improves, which positively affects their productivity. However, employees can engage in counterproductive behavior by choosing not to share knowledge (passive behavior) or by choosing to share inaccurate knowledge with their colleagues (active behavior). In this study, we examine how providing relative performance information (RPI) and rewarding individuals with performance-based incentives can jointly affect individuals' choices to engage in counterproductive knowledge sharing behavior. Using an experiment, we identify an interactive effect of RPI and individual incentives, such that participants engage in counterproductive knowledge sharing behavior most frequently when they receive RPI and are assigned individual performance-based incentives. We also observe that RPI increases the frequency of both active and passive counterproductive knowledge sharing behavior.

Private and Public Relative Performance Information under Different Compensation Contracts

2012 ◽  
Vol 88 (1) ◽  
pp. 327-350 ◽  
Author(s):  
Ivo D. Tafkov
Keyword(s):  
Individual Performance ◽  
Relative Performance ◽  
Data Availability ◽  
Performance Information ◽  
Public And Private ◽  
Compensation Contracts ◽  
Private And Public ◽  
Relative Performance Information ◽  
Wage Contract ◽  
Positive Effect

ABSTRACT: This study investigates the conditions under which providing relative performance information to employees has a positive effect on performance when compensation is not tied to peer performance. Specifically, I investigate, via an experiment, the effect of relative performance information (present or absent) on performance under two compensation contracts (flat-wage or individual performance-based). Given the presence of relative performance information, I examine the effect of the type of relative performance information (private or public) on performance. Using theory from psychology, I predict and find that relative performance information positively affects performance under the two compensation contracts and that this positive effect is greater under an individual performance-based contract than under a flat-wage contract. I also predict and find that, although both public and private relative performance information have a positive effect on performance, the effect is greater when relative performance information is public. Data Availability: Data are available from the author on request.

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