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A Study of the Effectiveness of Performance-based Incentives

• Use the article attached that addresses the ethical issues associated with performance-based incentive systems.
• Analyze the issue and devise an adaptation of the incentive system discussed in the article to increase ethical behavior.
o This might mean that you offer an alternative to a strictly sales-based incentive system.
o Consider the three major approaches (utilitarian, rights and duties, and fairness and justice) when discussing your alternative.
• Describe how organizations can design systems that support ethical behavior, while also providing incentives for high levels of performance.


An Effort Based Analysis of the Paradoxical Effects of Incentives on Decision-Aided Performance


Journal of Behavioral Decision Making
J. Behav. Dec. Making,, 24: 345-360 (2011)
Published online 2 March 2010 in Wiley Online Library
( DOI: 10.1002/bdm.69

Solution Preview

The prevailing issue in this article seems to be whether or not performance-based incentives increase decision making effectiveness, and what factors and variables may influence the effect that performance-based incentives have on decision performance. From the information contained within this article it appears that incentives alone do not increase decision performance. It appears that decision performance is increased by a combination of an incentive system, and additional contextual information for which to be able to make an effective decision. Another important variable in this issue is the ability and skill of the decision-maker, and the level of complexity of the decision that has to be made. Due to these factors, and adaptation of the ...

Solution Summary

This solution discusses the effectiveness of performance-based incentives.