This document is downloaded from DR‑NTU (https://dr.ntu.edu.sg) Nanyang Technological University, Singapore. Dynamic equity theory : modeling pay for performance's cross‑level effect Phang, Riyang 2015 Phang, R. (2015). Dynamic equity theory : modeling pay for performance's cross‑level effect. Doctoral thesis, Nanyang Technological University, Singapore. https://hdl.handle.net/10356/65643 https://doi.org/10.32657/10356/65643 Downloaded on 27 Sep 2021 04:25:04 SGT DYNAMIC EQUITY THEORY: MODELING PAY FOR PERFORMANCE’S CROSS-LEVEL EFFECT PHANG RIYANG Nanyang Business School Thesis submitted to the Nanyang Technological University in partial fulfilment of the requirement for the degree of Doctor of Philosophy 2015 ACKNOWLEDGEMENTS I would like to express great thanks to my examiners who willingly take up the challenge of grading a long thesis. Great thanks also go to my committee members who kindly devoted time and shared advice to help improve my work. Their comments pushed me and made this thesis so much more improved. Thank you, Prof. Hong! Thank you, Prof. Riyanto! Deep thanks go to two good men, my advisors. Prof. Georgios Christopoulos believed in me, gave me courage when I struggled with ill health, and never allowed me to stray from my journey. Prof. Chiu Chi Yue gave me the sense of sight to the world of research, showing me its taxa and genera. Without them, I would not have made it this far. Thank you, Prof. Chiu! Thank you, Prof. Christopoulos! Special thanks go to Prof. Quazi who started me on this journey, and to SMO division who supported me and ensured I have a well-balanced training. They nurtured the researcher in me. Thank you, Prof. Ang! Thank you, Prof. Quazi! Special thanks also go to Prof. Chernyshenko and Prof. Yu who read through my thesis in short notice and help assess the fitness of my work in the great discourse of management and HR. Thank you Prof. Yu! Thank you Prof. Chernyshenko! Lastly deep in my heart, I dedicate this thesis and thank my parents for their patience and support all these years. It has been a difficult seven and a half years for you. Thank you Dad, thank you Mum! TABLE OF CONTENTS LIST OF TABLES ...................................................................................................... i LIST OF FIGURES .................................................................................................... ii LIST OF ABBREVIATIONS ................................................................................... iv RELATED WORK ................................................................................................... vi ABSTRACT ............................................................................................................ viii Chapter 1. INTRODUCTION ................................................................................................ 1 2. EQUITY THEORY .............................................................................................. 6 Equity Theory and its Developments ............................................................... 6 Equity Theory Application in the Workplace ................................................. 20 3. PAY FOR PERFORMANCE ............................................................................. 24 Research and Applications ............................................................................. 24 Pay for Performance Paradox ......................................................................... 27 4. RESEARCH QUESTIONS ................................................................................ 41 Sufficient Condition for Pay for Performance ................................................ 41 Equity Theory through Time and Social Space .............................................. 42 Incorporating Cognitive and Social Aspects .................................................. 43 5. INTRODUCTION TO AGENT-BASED MODELING .................................... 44 Agent-based Modelling .................................................................................. 44 Some Known Uses of ABM ........................................................................... 56 Cellular Automata ........................................................................................... 75 6. COMPUTATIONAL EXPERIMENT 1 (BASE MODEL) ............................... 83 Model Design .................................................................................................. 83 Model Verification .......................................................................................... 89 Data Collection ............................................................................................... 92 Results ............................................................................................................. 94 Discussion ..................................................................................................... 100 7. COMPUTATIONAL EXPERIMENT 2 (MEMORY) ..................................... 104 Memory ......................................................................................................... 104 Code Modifications ...................................................................................... 108 Data Collection ............................................................................................. 110 Results ........................................................................................................... 110 Discussion ..................................................................................................... 121 8. COMPUTATIONAL EXPERIMENT 3 (COGNITIVE BIAS) ....................... 124 Cognitive Bias .............................................................................................. 124 Code Modifications ...................................................................................... 126 Data Collection ............................................................................................. 129 Results ........................................................................................................... 130 Experiment 3A .............................................................................................. 137 Discussion ..................................................................................................... 147 9. COMPUTATIONAL EXPERIMENT 4 (SOCIAL COMPARISON) ............. 150 Social Comparison ........................................................................................ 150 Number of Comparison Others ..................................................................... 157 Code Modifications ...................................................................................... 160 Data Collection ............................................................................................. 162 Results ........................................................................................................... 162 Discussion ..................................................................................................... 165 10. GENERAL DISCUSSION ............................................................................... 167 Implications for Theory ................................................................................ 175 Implications for Practice ............................................................................... 182 Limitations of Study ..................................................................................... 184 Empirical Links and Future Directions ......................................................... 190 Conclusion .................................................................................................... 201 REFERENCES ....................................................................................................... 203 LIST OF TABLES Table 2.1. Issues of Equity Theory Table 5.1. General Characteristics of ABM Table 6.1. Parameters Setup for Experiment 1 Table 7.1. Parameters Setup for Experiment 2 Table 7.2. Aggregate output at t=1,000 for different levels of reward schemes and memory capacities Table 7.3. Frequency of Time Periods Required to Reach Equilibrium at Zero (Experiment 2) Table 8.1. Parameters Setup for Experiment 3 Table 8.2. Aggregate output at t=2,000 for different reward schemes and levels of recency effect Table 8.3. Frequency of Time Periods Required to Reach Equilibrium at Zero (Experiment 3) Table 8.4. Parameters Setup for Experiment 3a Table 8.5. Aggregate output at t=2,000 for different reward schemes and levels of primacy effect Table 9.1. Parameters Setup for Experiment 4 Table 9.2. Time to Stability for Different Reward Schemes and Number of Comparison Others Table 10.1. Summary of Findings i LIST OF FIGURES Figure 6.1. Agent processes for Base Model Figure 6.2. Graphical User Interface of Model Implemented on Netlogo 5.1.0 Figure 6.3. Typical Equity States and Motivation Condition at t = 1 Figure 6.4. Average Aggregate Output of Different Reward Schemes across Time Figure 6.5. S.D. of Aggregate Output of Different Reward Schemes across Time Figure 6.6. Evolution of effort levels across time under different reward schemes Figure 7.1. Agent processes to account for storage, recollection, and evaluation of discrepancy information. Figure 7.2. Aggregate Output of Different Reward Schemes and Memory Capacities across Time Figure 7.3. Aggregate Output of Different Reward Schemes and Memory Capacities at t=1000 Figure 7.4. Evolution of effort levels across time under PFT 5-Turns