"We explore the relationship between performance-related pay and the attitudes and expectations of a representative sample of British workers. Our results suggest that employees who participate in productivity-linked bonus schemes, discretionary bonus schemes, share ownership or profit sharing are more optimistic about future employment and pay and are generally more satisfied with their work environment. However, employees participating specifically in profit-sharing schemes are less likely to work as hard as they can, ceteris paribus. This is an intriguing finding, insinuating as it does that group-sharing schemes are unable to rout the temptation to free ride and thereby ensure a first best cooperative equilibrium."

Support: Digital