Geary Lecture: “Is Pay-For-Performance Effective?”

April 22, 2010

Venue: ESRI, Whitaker Square, Sir John Rogerson’s Quay, Dublin 2

The Forthieth Geary Lecture (and second of 2010) was given by Professor Canice Prendergast, W. Allen Wallis Professor of Economics at the University of Chicago Booth School of Business.

For the last couple of decades, there has been a large body of work arguing for the widespread use of pay-for-performance as the appropriate means of aligning the interests of workers with those of their employers. This lecture outlines recent contributions to this body of work, and focuses on a number of general themes. First, the successes of pay-for-performance schemes are limited to a small class of agency settings that do not seem to generalise to other settings. Second, the literature has now begun to consider instruments other than pay as the most natural way to align interests. Finally, there is controversial literature in psychology that now challenges the basic assumptions of this strand of economic literature. The talk will review all these recent contributions, and likely directions for future research.

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This lecture is one of the special events to mark the Institute’s fiftieth birthday.

Canice Prendergast, who was a research assistant at the ESRI from 1983 to 1985, is now one of the world’s foremost researchers on workplace incentives and their impact on productivity. He is currently the W. Allen Wallis Professor of Economics at the University of Chicago Booth School of Business.

Articles on Professor Prendergast’s recent research have appeared in The Financial Times, The Economist, Fortune Magazine, and Der Spiegel. He has published papers in most leading international economics journals, including theAmerican Economic Review, the Economic Journal, the European Economic Review, the Journal of Labor Economics and theJournal of Political Economy, the latter two of which he has also edited. He is the author of “The Limits of Bureaucratic Efficiency”, published in the Journal of Political Economy in 2003 and “The Tenuous Trade-Off Between Risk and Incentives”, which appeared in the same journal in 2002.

Professor Prendergast joined the Chicago Booth faculty in 1990, prior to which he was an Open Prize Research Fellow at Nuffield College, Oxford, and a lecturer at Jesus College, Oxford. He is the recipient of two US National Science Foundation Awards and is an elected faculty research fellow of the US National Bureau of Economic Research. He has a degree in economics from Trinity College Dublin (1983), a masters from the London School of Economics (1986) and a Ph.D. from Yale (1989).


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