Framing manipulations in contests : a natural field experiment

Fuhai HONG, Tanjim HOSSAIN, John A. LIST

Research output: Journal PublicationsJournal Article (refereed)

8 Citations (Scopus)

Abstract

Exploiting findings that losses loom larger than gains, studies have shown that framing manipulations can increase productivity of workers. Using a natural field experiment that exogenously manipulates wage bonuses within contests in a Chinese high-tech manufacturing facility, we show that how loss aversion affects worker behavior critically depends on the incentive scheme as well as the framing manipulation. Four sets of two identical teams competed against each other to win a bonus given to the team, within a set, with the higher average hourly productivity over the week. In each set, the bonus was framed as a reward or gain for one team and as a punishment or loss for the other. Average weekly productivity was slightly higher under the loss treatment, but this increase was statistically insignificant. However, the team under the loss treatment was at least 35% more likely to win the contest. As teams’ payoffs are based on relative productivity under a contest, framing effect is much stronger in terms of relative productivity. Finally, workers seemingly responded to the bonus by increasing the quality of production as well as quantity—defect rate fell as productivity increased.
Original languageEnglish
Pages (from-to)372-382
Number of pages11
JournalJournal of Economic Behavior and Organization
Volume118
Early online date18 Mar 2015
DOIs
Publication statusPublished - Oct 2015
Externally publishedYes

Bibliographical note

The authors acknowledge the SSHRC Grant (No.489160).

Keywords

  • Contests
  • Field experiment
  • Framing effect
  • Incentive contracts
  • Loss aversion
  • Worker productivity

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