Risk Preference, Compensation Incentives, and Work Effort—A Prospect Perspective

• Main Authors: Wen-Hsuan, Yen, 顏雯萱
• Other Authors: 劉維寧
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/05938939929016247237

碩士 === 高雄師範大學 === 人力與知識管理研究所 === 98 === The compensation expense is one of the most important costs of organizations, which would eager to understand how to pay in an effective way. This research has focused on risk preference and choice behavior between employees with decision making. This paper presents a critique of prospect threoy (Kahneman and Tverskey1979) as a descriptive model of decision making under risk. We investigate whether the characteristics of the value function like concavity for gains, convexity for losses, and loss aversion apply to the dependence of work extent, work effort, and intrinsic motivation. The organizations can offer the different incentive pay to employees within their value function. This is tested with an experiment measure for the reference point of incentive pay for a food processing industry in Kaohsiung. This study also employs process measures and examines the mechanisms underlying the impact of the effort stream on the trade-off between the certainty and magnitude of rewards. This research use The Kolmogorov-Smirnov Test to verify the differences of the value function. A review of the experimental evidence and the results of a new experiment confirm a pattern of risk attitudes: risk aversion for the work extent is easy, and risk seeking for the work extent is hard. The organizations must use simplified approaches to incentive pay in order to function effectively.