Do Public Employees "Game" Performance Budgeting Systems? Evidence From the Program Assessment Rating Tool in Korea

Abstract

We examine whether performance budgeting systems such as the Program Assessment Rating Tool (PART) induce public employees to engage in gaming behavior. We propose an algorithm for detecting gaming behavior that makes use of the discrete nature of the PART system in Korea (KPART) and the revealed patterns of the distribution of the KPART scores. By employing the test developed by McCrary, we find suspicious patterns in the density of the KPART scores and evidence points to the fact that manipulation is prevalent in the KPART system. Our analysis suggests that public employees are sensitive to negative incentives and that great care must be taken when designing performance budgeting systems.