Impact of Relative Performance Feedback on Beliefs and Preferences across Dissimilar Tasks
Lingbo Huang and Zahra Murad
Employees typically have to work on multiple tasks that require unrelated skill sets. While past research strongly supports that feedback influences beliefs and preferences within same tasks, little is known about effects of feedback across dissimilar tasks. In a novel laboratory experiment using two unrelated real effort tasks, we find that feedback of relative performance in the first task causally affects confidence beliefs and preferences for comparative pay in the second task. Our data also exhibit differential effects of feedback on women’s and men’s preferences, which help close the pre-existing gender gap in preferences. Analysis of economic efficiency shows that negative feedback in the first task improves "would-be" payoffs of low performing subjects in the second task by discouraging them from choosing the comparative pay option. The results have important implications for organizations to understand both the powers and the limitations of using relative performance feedback as intervention policies.