Pay for (individual) performance: Issues, claims, evidence and the role of sorting effects

We address two broad questions: how much pay for individual performance (PFIP) is there and what are the positive and negative effects of PFIP? We consider specific claims, including that PFIP does not motivate (or even de-motivates), that it is ineffective in teams, and that it is ineffective in some national cultures. We demonstrate how incorporating sorting effects of PFIP into conceptual treatments of PFIP can change how one views the likely effectiveness of PFIP across contexts.