Abstract

This study reports the results of an analysis of written protocols collected in a laboratory experiment from 77 subjects while they were making compensation contract selection decisions. Each subject made compensation decisions for four divisional managers operating under them. The researchers varied the level of environmental uncertainty, as well as the level of perceived agent effectiveness. The results show that the type of factors considered by the individuals differed significantly. Subjects indicated that they focused more heavily on one of the two manipulated conditions, but not equally on both. It was also found that, overall, agent effectiveness factors weighed more heavily in the compensation decisions than uncertainty considerations. Additionally, it was found that subjects used some factors in their decisions that were not part of the experimental treatments, lending further evidence to the individuality of influences on compensation contract selections.

Document Type

Article

Publication Date

Summer 1996

Publisher Statement

Copyright © 1996 Pittsburgh State University. This article first appeared in Journal of Managerial Issues 8, no. 2 (Summer 1996): 170-83.

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