That story was interesting, but it is properly worth pointing out that the productivity was fruit picking, a line of work were the results are easy to measure and compare, the requirements of skill are modest and the difference between the highest and lowest performer small. Care should therefore be taken before this is applied to other areas where these assumptions no longer holds, such as software development.
"a line of work were the results are easy to measure and compare, the requirements of skill are modest and the difference between the highest and lowest performer small."
Definitely. And it should also be noted that the work in the story is seasonal. I'm not sure that the incessant competition in this performance-pay model would be entirely conducive to retaining staff long-term. However, this may not be a big problem with unskilled industries where staff turnover is high anyway.
Yes. The seasonal thing is central. Important assumptions here are basically:
A - Workers have no incentive not to screw the employer.
B - Employing/Retaining staff's not an issue. This is also part of the seasonal work. It's not worth looking for a different job when it's only a couple of weeks.
If this were a more perfect market (infinite time, perfectly informed participants ...), the decreasing marginal rates (to avoid being over generous), would disappear. You'd be better off pinching your neighbour's picker that picks twice 2x fruit with 2 X minimum wage then keeping you 0.9x picker at 1 X minimum wage.
True. That is what makes it a great read (I thought it was) & a great experiment. You can easily understand the pieces.
But hopefully, some rules & guidelines might emerge from this type of experimentation. These would (if they are good rules & guidelines) be applicable more widely.
It'd be difficult to work out the laws of mechanics by examining an engine. But playing with a lead ball in a lab can eventually help you build a better engine.
