Ian Larkin

Assistant Professor of Business Administration (Leave of Absence)

Ian Larkin is an assistant professor of business administration in the Negotiation, Organizations, and Markets Unit.

Ian researches the impact of formal and informal extrinsic rewards on employee decisions and firm performance, using real-world data from corporations and data generated from experiments. He is currently working on a major research project that examines how the incentives of pharmaceutical sales representatives affect physician prescribing behavior. Ian’s research has been published in the Journal of Labor Economics, Strategic Management Journal, American Economic Journal: Microeconomics and Academy of Management Papers and Proceedings, and has been cited by media outlets such as The Wall Street Journal, The New York Times, and National Public Radio.

Ian received his Ph.D. from the Haas School of Business at the University of California, Berkeley. He completed an M.Sc. in Development Economics from the University of London, where he was a British Marshall Scholar. As part of his undergraduate work at the University of Arizona, Ian spent over three years living in China, Japan, and Taiwan, and he speaks conversational Mandarin Chinese and Japanese. As a junior, he was awarded a Harry S. Truman Scholarship, given to students who commit to a career in public service. Before entering his Ph.D. program, Ian spent four years as an associate and engagement manager in the Hong Kong and Silicon Valley offices of McKinsey & Company, advising senior executives on corporate strategy in the banking and high technology industries. He serves on the Selection Committee for the British Marshall Scholarship and previously played the same role for the Harry S. Truman and Flinn scholarships.

  1. Current Research

    Ian studies extrinsic rewards -- monetary incentives from formal compensation systems, as well as other formal and informal external rewards-- in order to help businesses understand the tensions and tradeoffs inherent in motivating employees. His research takes a disciplined cost-benefit approach from economics and integrates perspectives from behavioral economics and social psychology. In his work, Ian's research measures the impact of different kinds of incentives in a way that allows direct comparisons across the systems.  Much of his research has focused on salespeople, both in the enterprise software and pharmaceutical industries.

    Nonlinear incentive schemes

    The impact of nonlinear incentive schemes for employees may have unintended consequences. Using a leading software vendor’s complete sales database dating over six years, Ian's research demonstrated that salespeople “game” the commission system, which pays higher commissions as a person sells more in a given financial quarter, by consolidating deal closings into “big” quarters – and that this gaming costs the company 5 to 8 percent of revenue.

    While this research may suggest that firms err in using non-linear schemes, Ian's subsequent, experimental-based research (with Stephen Leider) demonstrated that firms also benefit from such nonlinear schemes.  The research shows the use of non-linear schemes can attract and retain highly overconfident employees who are particularly skilled at certain tasks, and to whom firms pay less than the employee expects when joining the company. In related theoretical work (with Lamar Pierce and Francesca Gino), he has argued that insights from social psychology, such as overconfidence and the importance of peer comparisons, must be integrated into the traditional economic model of incentive compensation if the model is to accurately explain and inform the choice of incentive schemes by firms.

    Social comparisons in the workplace

    Ian’s research has also focused on recognition by peers, another form of extrinsic reward that can stem from both formal firm policies and informal employee observation. His research demonstrates that peer recognition is so motivating that software salespeople will forgo nearly $30,000 in commissions in order to increase their chances to be tapped for a “Sales Club” that offers no financial benefits.  In lab experiments (with Matthew Chao), he shows that unfavorable social comparisons drive cheating as much as monetary incentives do.  His research (with Benjamin Edelman) has also demonstrated that academics are motivated to deceptively inflate their download counts on SSRN, a leading working paper repository, because of unfavorable comparisons with colleagues or peers doing similar research.

    Pharmaceutical detailing and physician prescribing

    In his most recent line of research, Ian has examined the effect of detailing visits by pharmaceutical salespeople on the prescribing habits of physicians. By comparing prescribing decisions of physicians at academic medical centers with policies regulating detailing visits and those without such policies, his research examines a host of psychological and informational strategies by which salespeople influence physicians to prescribe their products.