A1344
Title: Time dependence and preference: Implications for compensation structure and shift scheduling
Authors: Byoung Park - SUNY Albany (United States) [presenting]
Abstract: Agents' time dependence is jointly examined, as period effects within the instantaneous utility, and time preference, the behaviour on discounting future utility. The start and the end of period effects are considered for time dependence and exponential and hyperbolic discounting for time preference. It provides formal identification arguments and sufficient conditions for both time constructs, including the duration of time dependence. The empirical application uses granular individual data and daily observations to examine the effects of the two-time constructs of agents' behaviour. By combining a structural model with a field experiment that exogenously varies the sales evaluation cycle, the effects of compensation structure are identified on the duration and magnitude of time dependence. Counterfactual studies examine changes in agents' behaviour, and thus their sales outcome, in response to alternative compensation structures and employee shift scheduling policies. The results demonstrate a trade-off between long and short quota cycles, how a quota bonus plan can motivate different types of agents, and how an organization can redesign its shift schedule to better align with agents' time assessment.