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Relative rewards within team-based compensation

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  • Irlenbusch, Bernd
  • Ruchala, Gabriele K.

Abstract

How to design compensation schemes to motivate team members appears to be one of the most challenging problems in the economic analysis of labour provision. We shed light on this issue by experimentally investigating team-based compensations with and without bonuses awarded to the highest contributors in teams. A purely team-based compensation scheme induces agents to voluntarily cooperate while introducing an additional relative reward increases effort and efficiency only when the bonus is substantial. In this case, however, the data suggests that tournament competition crowds out voluntary cooperation within a team.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 15 (2008)
Issue (Month): 2 (April)
Pages: 141-167

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Handle: RePEc:eee:labeco:v:15:y:2008:i:2:p:141-167

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Web page: http://www.elsevier.com/locate/labeco

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Citations

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Cited by:
  1. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, Elsevier.
  2. Samuel Bowles & Sandra Polania-Reyes, 2012. "Economic Incentives and Social Preferences: Substitutes or Complements?," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 368-425, June.
  3. Gürerk, Özgür & Irlenbusch, Bernd & Rockenbach, Bettina, 2009. "Motivating teammates: The leader's choice between positive and negative incentives," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 591-607, August.
  4. Bernd Irlenbusch & Janna Ter Meer, 2012. "Fooling the Nice Guys: The effect of lying about contributions on public good provision and punishment," Cologne Graduate School Working Paper Series 03-11, Cologne Graduate School in Management, Economics and Social Sciences.
  5. Loukas Balafoutas & Martin G. Kocher & Louis Putterman & Matthias Sutter, 2010. "Equality, equity, and incentives: An experiment," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 10-13, School of Economics, University of East Anglia, Norwich, UK..
  6. Sebastian J. Goerg & Sebastian Kube & Ro'i Zultan, 2010. "Treating Equals Unequally: Incentives in Teams, Workers' Motivation, and Production Technology," Journal of Labor Economics, University of Chicago Press, vol. 28(4), pages 747-772, October.
  7. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A Preference-based Lucas Critique of Public Policy," CESifo Working Paper Series 2734, CESifo Group Munich.
  8. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A preference-Based Lucas Critique of Public Policy," UMASS Amherst Economics Working Papers 2009-11, University of Massachusetts Amherst, Department of Economics.
  9. Samuel Bowles & Sandra Polania-Reyes, 2011. "Economic incentives and social preferences: substitutes or complements?," Department of Economics University of Siena 617, Department of Economics, University of Siena.
  10. Kidd, Michael & Nicholas, Aaron & Rai, Birendra, 2013. "Tournament outcomes and prosocial behaviour," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 387-401.
  11. Fabio Landini, 2012. "The Evolution of Control in the Digital Economy," Department of Economics University of Siena 655, Department of Economics, University of Siena.
  12. Steffen Keck & Natalia Karelaia, 2012. "Does competition foster trust? The role of tournament incentives," Experimental Economics, Springer, vol. 15(1), pages 204-228, March.

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