The Provision of Relative Performance Feedback: An Analysis of Performance and Satisfaction

Abstract

This paper studies the effect of providing relative performance feedback on individuals' performance, under two incentive schemes. In a laboratory setup, agents perform a real-effort task. We show that relative performance feedback increases performance when performance is related to pay (piece-rate) but has no effect on performance when pay is independent of performance (flat-rate). These effects are independent of the agent's relative position. Subjects are also asked to rate their satisfaction during the experiment. We find that under flat-rate, feedback has no effect on agents' satisfaction, while under piece-rate, feedback about relative position affects satisfaction.