Coordinating Effort Under Team-Based and Individual Incentives: An Experimental Analysis

47 Pages Posted: 1 Nov 2004

See all articles by Frederick W. Rankin

Frederick W. Rankin

Colorado State University, Fort Collins - College of Business

Abstract

This paper explores the behavior of workers in an environment where it is efficient to engage in the mutual exchange of help. Experimental data show that output and workers' payoffs are greater under team-based incentives than under individual incentives in an environment where coordination is difficult. However, when the environment is more conducive to coordination (i.e., a setting where agents interact repeatedly), output and payoffs are greater under individual incentives. Manipulation of the amount of mutually observable information provides evidence that relative to individual incentives, team-based incentives create a more difficult coordination problem for workers and that cooperation requires a richer informational environment.

Keywords: Compensation, Teams, Information, Mutual Observability

JEL Classification: M40, M46, J33

Suggested Citation

Rankin, Frederick W., Coordinating Effort Under Team-Based and Individual Incentives: An Experimental Analysis. Available at SSRN: https://ssrn.com/abstract=469982

Frederick W. Rankin (Contact Author)

Colorado State University, Fort Collins - College of Business ( email )

Fort Collins, CO 80523
United States