| The bonus and penalty language can be used in employment contracts to describe their incentives, which can promote the performance of employees to varying degrees. When these two contracts are economically equivalent, both are useful incentive methods, but we usually see bonus contracts as more useful in real life. This research explores the comparative effectiveness of these two contract systems in improving employee productivity, considering the influence of task type, contract type, and task difficulty. I conducted an online experiment and analyzed the experimental result to assess the question. The results show that there is no significant difference in productivity between bonus and penalty contracts under different task difficulties. Participants generally performed better on the tasks under the contract system chosen by themselves, although the difference in boosting effect between the assigned and chosen tasks was not significant, except under certain conditions. This research explores employee perceptions and acceptance of these two contracts. I found that participants preferred bonus contracts over penalty contracts because they preferred rewards and higher wages, although a minority were neutral about punishment. By investigating these aspects, this research aims to provide insights into the optimization of the contract system to increase employee productivity, reduce transaction costs, and foster a more efficient and harmonious working environment. |
