Abstract
Since the 1990s, an increasing number of Japanese enterprises and organizations have introduced performance-based pay to increase their labor productivity. However, some empirical studies show that performance-based pay does not always work as intended. This is partly due to workers' dissatisfaction with their performance evaluations. One hypothesis as to why performance-based pay does not work as intended may be derived from Marx's observations on workers' fairness ideals in the modern collaborative labor process: each labor process is mutually connected and each worker's output is dependent on that of others. The second hypothesis we derive is from an empirical analysis by Cole and Webb; that is, the measurability of individuals' performance is a necessary requirement for workers' commitment to performance-based remuneration. To examine these two hypotheses, we performed economic experiments comprising a production stage and a distribution stage. In our experiment, each participant joined a two-player team and engaged in calculation tasks to earn some amount of individual earnings. Each participant then distributed the total earnings of his team with his pair. We set up four treatments with different production modes (collaborative or independent) and different conditions of individuals' performance information (disclosure or nondisclosure). Further, we examined which fairness ideals among selfish, performance-based or egalitarian individuals prefer to commit in a distribution stage. Our experimental results showed that a significant number of subjects engaged in collaborative production prefer to commit egalitarian distribution and are less selfish, compared with those engaged in independent production modes. It is also observed that a significant number of participants privy to other's performance information prefer performance-based pay, whereas those without other's information prefer an egalitarian distribution. Our experimental results collaborate the above two hypotheses and partly explain recent failures in performance-based pay systems, i.e., workers do not commit to performance-based pay in workplaces where the labor process is collaborative, and it is difficult to correctly measure an individual's performance.
