Firing in the Dark: Minimal Information for Maximal Performance

Economics

Speaker:José María Ortiz Gómez, Autonomous University of Barcelona
Date: Friday 18 November 2016
Time: 15.30
Location: Matrix Lecture Theatre, Building One

Further details

We study the incentive effect of firing threats when bosses have limited information about workers. We show that, regardless of the amount of information possessed by the boss, firing threats substantially boost workers’ production and reduce on-the-job leisure. Even when the boss has no individual information about workers’ effort and production levels, firing threats have strong incentive effects. Any minimal amount of individual information about workers individual effort such as the time they spent at their work station is sufficient to ensure strong incentive effects. Our findings thus support the use of firing threats based on rudimentary yet uncontroversial measures of work performance such as absenteeism, in organizational settings in which limited information about workers is available.