HKUST IEMS Working Papers No. 2019-69
Subjective performance evaluation is widely used by firms and governments to provide work incentives. However, delegating evaluation power to senior leadership could induce influence activities: agents might devote much efforts to please their supervisors, rather than focusing on productive tasks that benefit their organizations. We conduct a large-scale randomized field experiment among Chinese local government employees and provide the first rigorous empirical evidence on the existence and implications of influence activities. We find that state employees are able to impose evaluator-specific influence to affect evaluation outcomes, and that this process could be partly observed by their co-workers. Furthermore, introducing uncertainty in the identity of the evaluator, which discourages evaluator-specific influence activities, can significantly improve the work performance of state employees.
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