The Effects of Real-Time Feedback on Effort and Performance: Evidence from a Natural Quasi-Experiment

Image credit: Unsplash

Abstract

New digital technologies allow companies to provide managers with performance feedback in real-time. We provide evidence on the causal effects of real-time feedback on individual effort and decision quality by exploiting a natural quasi-experiment in the setting of professional soccer referees. Our results suggest that the effects of real-time feedback depend on agents’ experience. Specifically, we find that experienced agents decrease their effort under real-time feedback without harming the quality of their initial decisions. This results in better final decisions because real-time feedback allows agents to correct initially wrong decisions upon feedback. In contrast, less experienced agents increase their effort but make worse initial decisions and, utilizing corrective feedback, only manage to compensate for their increased number of initial mistakes but see no improvement in the quality of final decisions. Furthermore, we document that the effects of real-time feedback change over time as agents gain more experience under this system.

Daniel Schaupp
Daniel Schaupp
Assistant Professor of Accounting

My research interests include transparency, opportunisitc behavior in organizations and performance evaluation and feedback systems.

Related