Topic: Paying gig workers

Abstract:
Using a randomized controlled trial, we study payment schemes for freelancers offering services on
an online platform. Under the initial scheme, the firm pays workers a pure commission. Our
experiment tests predictions from a formal model on the labor supply and performance effects of an
alternative pay scheme, particularly for individuals with different degrees of risk aversion and
intrinsic motivation. The intervention reduces the commission and adds a fixed payment per order.
This insures the freelancers against earnings risk whilst reducing their upside potential. We find no
positive effect on labor supply (irrespective of personality traits) and no overall performance
reduction. However, there is strong evidence for a heterogeneous treatment effect on sales
performance. In line with standard neoclassical reasoning, the treatment reduced performance for
less intrinsically motivated workers. For more intrinsically motivated workers, however, we observe
the opposite pattern as performance increased even though commission rates were reduced.