Coordinating Effort Under Team-Based and Individual Incentives: An Experimental Analysis
47 Pages Posted: 1 Nov 2004
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: Suggested Citation
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