Media and Motivation: The Effect of Performance Pay on Writers and Content
Presented by:
Jared Gars
Practice Job Talk
Department of Agricultural & Applied Economics
University of Wisconsin - Madison
Thursday, November 9, 2017
3:45 pm-5:00 pm
Taylor-Hibbard Seminar Room (Rm103)
This paper shows how performance pay affects worker productivity in a setting where agents choose how to allocate effort across multiple tasks with stochastic output. In an online news firm in Kenya, journalists produce articles, choosing effort levels and topics with heterogeneous marginal returns. We exploit a natural field experiment that allocated journalists to a flat rate pay per article contract or a piecewise linear contract in views. We show theoretically and empirically that the output-based contract reduces the number of articles that journalists submit and increases per-article effort, resulting in an eighty percent increase in productivity. Our study shows that output-based incentive contracts have implications for journalists' effort and content choices, with short and long-term implications for profitability and for the quality of news.