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Incentives and Culture: Evidence from a Multi-Country Field Experiment
Last registered on September 17, 2019

Pre-Trial

Trial Information
General Information
Title
Incentives and Culture: Evidence from a Multi-Country Field Experiment
RCT ID
AEARCTR-0004685
Initial registration date
September 11, 2019
Last updated
September 17, 2019 10:32 AM EDT
Location(s)

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Primary Investigator
Affiliation
LSE
Other Primary Investigator(s)
PI Affiliation
PI Affiliation
London School of Economics
Additional Trial Information
Status
On going
Start date
2010-09-30
End date
2020-01-31
Secondary IDs
Abstract
Motivated by the correlation between culture and incentive pay across countries, we test the hypothesis that incentive pay is more effective in individualistic cultures. To do so, we establish identical data entry firms to create experimental variation in pay packages in three countries that have similar GDP per capita but different level of individualism: Ghana, India and the Philippines. The effect of performance pay on log productivity is lowest in the least individualistic country (Ghana) and highest in the most individualistic country (India), with the Philippines falling in between. In line with the culture hypothesis, publicising individual ranks is effective in India but backfires in the Philippines.
External Link(s)
Registration Citation
Citation
Bandiera , Oriana , Amanda Dahlstrand-Rudin and Greg Fischer. 2019. "Incentives and Culture: Evidence from a Multi-Country Field Experiment." AEA RCT Registry. September 17. https://doi.org/10.1257/rct.4685-2.0.
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Experimental Details
Interventions
Intervention(s)
We founded model data entry firms in three countries with different culture but fairly similar GDP per capita. In all three countries we implemented three classic pay packages: our control group received fixed wages, whilst treatment is divided into individual incentives (paid by keystroke per hour) and group incentives (paid by the average keystrokes per hour in a group of four). To shut down income effects we set the piece rates so that a worker with median productivity is expected to earn the same. Finally, we generate exogenous variation in the visibility of individual reqards by cross-randomising both treatments with the publication of performance rankings.
Intervention Start Date
2010-12-20
Intervention End Date
2012-02-23
Primary Outcomes
Primary Outcomes (end points)
Worker productivity measured as log keystrokes per hour. Quality-adjusted worker productivity measured as log keystrokes per hour adjusted for the number of erroneous data entry points.
Primary Outcomes (explanation)
Keystroke is defined as “a keyboard action that results in data capture in the used program.” This was measured directly by the data entry program.
Secondary Outcomes
Secondary Outcomes (end points)
Log profits for firm per worker-contract.
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
From an experimental perspective, choosing Ghana, India and the Philippines allowed us to explore a variety of countries as measured by their Hofstede scores for individualism. According to Geert Hofstede’s measures of Individualism, Ghana scores a 15, near the bottom of the Hofstede measures for Individualism, while India scores a 48 in the middle of the field and the Philippines a 32. In the course of the experiment, we interact country-level individualism with the incentive contracts.

We ran two two-day contracts per week over the course of a year and a half, with an experimental duration of ten months, one year and nine months in Ghana, India and the Philippines, respectively. To avoid spillovers, all workers in a given two-day contract received the same contract (i.e. all workers in the office at a given time received flat wage or IPR). We provide these workers with a written contract to sign that laid out the contract terms. Following the brief orientation, we assigned workers to one of ten workstations and the on-site manager gave a fifteen-minute Power Point training. By using a Power Point presentation to train workers, we eliminated variations in training quality that could have occurred over the course of the experiment.

The data entry interfaces captured the total number of key strokes entered by workers over the course of the two-day contract. In addition, the data entry interface captured key timing variables, including the daily start time, end time and the number of seconds to complete one survey. At the end of the two-day contract, the on-site manager paid workers in cash. For workers under the flat wage contract, we did not carry out a salary calculation, and paid each worker a cash wage of 50 GHC, 500 INR or 900 PhP. For the five incentive contracts, the on-site manager collected all data entered by the workers and calculated their pay using based on the conditions of the workers’ assigned contracts. Workers received cash along with a receipt stating the number of key strokes entered and the calculation used to define their two-day wage.
Experimental Design Details
Not available
Randomization Method
Stratified randomization done in office by a computer after each interview round. Stratification variables: race/ethnicity, baseline ability, gender.
Randomization Unit
The unit of randomization was a worker-contract (a two-day contract). Hence one worker could be randomized again to another treatment if the worker worked 2 two-day contracts. However, to avoid spillovers, all workers in a given two-day contract received the same contract (i.e. all workers in the office at a given time received flat wage or individual piece rate).
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
1583 2-day contracts. Some workers had more than 1 contract, but maximum 2 contracts.
Sample size: planned number of observations
1583 2-day contracts.
Sample size (or number of clusters) by treatment arms
Pooling all 3 countries: 153 Flat wage contracts. 307 Individual piece rate contracts. 306 Group piece rate contracts. 307 Individual piece rate with public ranking contracts. 306 Group piece rate with public ranking contracts. 204 Modified (lower-powered) individual piece rate contracts.

Divided by country: 459 contracts in Ghana, 571 contracts in India, 553 contracts in Philippines.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Innovations for Poverty Action Institutional Review Board – USA.
IRB Approval Date
2010-09-09
IRB Approval Number
495.10September-002