Bonus payments and reference point violations

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IZA Research Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 20.10.2009, 12:15 - 13:30

   

Presentation by 

Dirk Sliwka (University of Cologne)
   

Abstract:

We investigate how bonus payments affect satisfaction and performance of managers in a large, multinational company. While the absolute amount of the bonus payment has no noticeable effect on satisfaction, falling behind a natural reference point for bonus comparisons reduces satisfaction and but also subsequent performance. The effect tends to be mitigated if information about one's relative standing towards the reference point is withheld.

   
   
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