An experimental study compares cheating behavior under three compensation systems: target-based, linear piece-rate, and tournament-based. Participants played an anagram game, with financial incentives tied to performance. Results show that productivity was similar across all systems, but target-based compensation led to significantly more cheating than the other two. Cheating was measured by the number of overclaimed words, the number of work/pay periods with overclaims, and the number of participants making overclaims at least once. The study suggests that target-based incentives can encourage cheating, but this does not necessarily mean that linear piece-rate systems are better. The findings indicate that while target-based systems may offer higher financial rewards for meeting performance targets, they can also create incentives for dishonest behavior. The study highlights the importance of understanding how different compensation systems influence employee behavior and the potential consequences of using performance-based incentives. The results support the idea that cheating can be mitigated without eliminating performance pay entirely. The study also notes that the relationship between cheating and compensation systems is complex and depends on individual attitudes toward guilt and risk. The findings have implications for organizational policies and the design of compensation systems in various industries.An experimental study compares cheating behavior under three compensation systems: target-based, linear piece-rate, and tournament-based. Participants played an anagram game, with financial incentives tied to performance. Results show that productivity was similar across all systems, but target-based compensation led to significantly more cheating than the other two. Cheating was measured by the number of overclaimed words, the number of work/pay periods with overclaims, and the number of participants making overclaims at least once. The study suggests that target-based incentives can encourage cheating, but this does not necessarily mean that linear piece-rate systems are better. The findings indicate that while target-based systems may offer higher financial rewards for meeting performance targets, they can also create incentives for dishonest behavior. The study highlights the importance of understanding how different compensation systems influence employee behavior and the potential consequences of using performance-based incentives. The results support the idea that cheating can be mitigated without eliminating performance pay entirely. The study also notes that the relationship between cheating and compensation systems is complex and depends on individual attitudes toward guilt and risk. The findings have implications for organizational policies and the design of compensation systems in various industries.