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Does Team-Based Compensation Give Rise to Problems When Agents Vary in Their Ability?

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  • Claude Meidinger

    ()

  • Jean-Louis Rullière

    ()

  • Marie-Claire Villeval

    ()

Abstract

This paper reports the results of an experiment on how team heterogeneity in terms of productivity influences both the revenue sharing proposed by the principal to the team and the employees' performance. Experimental evidence shows that when the team is heterogeneous, the principal does not try to motivate the agents through her sharing offer. Regardless of the level of team-based compensation, a large amount of free riding occurs since each agent is mainly influenced by his teammate's behavior. In contrast, when the team is homogeneous, agents are better able to cooperate, reciprocating the principal's offer. Copyright Kluwer Academic Publishers 2003

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Bibliographic Info

Article provided by Springer in its journal Experimental Economics.

Volume (Year): 6 (2003)
Issue (Month): 3 (November)
Pages: 253-272

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Handle: RePEc:kap:expeco:v:6:y:2003:i:3:p:253-272

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Web page: http://www.springerlink.com/link.asp?id=102888

Related research

Keywords: experiments; free riding; compensation; peer pressure; teamwork;

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Cited by:
  1. Florian Englmaier & Georg Gebhardt, 2011. "Free-Riding in the Lab and in the Field," CESifo Working Paper Series 3612, CESifo Group Munich.
  2. Radu Vranceanu & Fouad El Ouardighi & Delphine Dubart, 2013. "Coordination in Teams : A Real Effort-task Experiment with Informal Punishment," Post-Print hal-00857364, HAL.
  3. Claude Montmarquette & Jean-Louis Rullière & Marie-Claire Villeval & Romain Zeiliger, 2004. "Redesigning Teams and Incentives in a Merger: An Experiment with Managers and Students," Management Science, INFORMS, INFORMS, vol. 50(10), pages 1379-1389, October.
  4. Charness, Gary & Kuhn, Peter J., 2010. "Lab Labor: What Can Labor Economists Learn from the Lab?," IZA Discussion Papers 4941, Institute for the Study of Labor (IZA).
  5. Königstein, Manfred & Ruchala, Gabriele K., 2007. "Performance Pay, Group Selection and Group Performance," IZA Discussion Papers 2697, Institute for the Study of Labor (IZA).
  6. Chao, Hong & Croson, Rachel T.A., 2013. "An experimental comparison of incentive contracts in partnerships," Journal of Economic Psychology, Elsevier, Elsevier, vol. 34(C), pages 78-87.
  7. Philip Babcock & Kelly Bedard & Gary Charness & John Hartman & Heather Royer, 2011. "Letting Down the Team? Evidence of Social Effects of Team Incentives," NBER Working Papers 16687, National Bureau of Economic Research, Inc.
  8. Sandra Maximiano & Randolph Sloof & Joep Sonnemans, 2007. "Gift Exchange in a Multi-Worker Firm," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(522), pages 1025-1050, 07.
  9. Marilyne Antonetti & Alexandra Rufini, 2008. "Social norms, coordination and collaboration in heterogeneous teams," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(7), pages 547-554.

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