Impact of Relative Performance Feedback on Beliefs and Preferences across Dissimilar Tasks
Lingbo Huang and Zahra Murad
Employees typically work on multiple tasks that require unrelated skills and abilities. While past research strongly supports that feedback influences beliefs and preferences for comparative pay within same tasks, little is known about effects of feedback across different tasks. In a novel laboratory experiment using two unrelated real effort tasks, we find that feedback of relative performance in the first task significantly affects valuations of (i.e. revealed preferences for) comparative pay in the second task. Further analysis suggests that a taste-based mechanism and a belief-based mechanism play independent roles in explaining the observed feedback effects. We also find that relative performance feedback on average increases females’ valuations of comparative pay compared to when such feedback is absent. The results have important implications for organizations to understand both the powers and the limitations of using relative performance feedback as intervention policies.