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Absolute and relative rewards for individuals in team production

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  • David L. Dickinson

    (Department of Economics, Colgate University, Hamilton, NY, USA)

  • R. Mark Isaac

    (Department of Economics, University of Arizona, Tucson, AZ, USA)

Abstract

This paper examines the use of prizes as an incentive device in team production environments. We reward team members in two different ways. First, heterogeneously endowed individuals are given a monetary prize for high absolute levels of contributions. Secondly, a prize is given for high levels of contributions relative to endowment-token endowments represent abilities to contribute to the team. We find that both prize treatments significantly increase group contributions, but rewarding individuals based on absolute contributions also widens the dispersion between the high-contributor and the remainder of the group. Contributions are highest when the prize is for high relative contributions, and the dispersion in contributions is lower than with a prize for absolute contributions. Furthermore, these prizes could be self-funded since giving prizes creates more system-wide wealth than what the prize costs. These results have implications for work team environments in which prizes given for individual effort towards the group goal could raise overall effort levels. © 1998 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 19 (1998)
Issue (Month): 4-5 ()
Pages: 299-310

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Handle: RePEc:wly:mgtdec:v:19:y:1998:i:4-5:p:299-310

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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Cited by:
  1. Choi, Jung-Kyoo & Ahn, T.K., 2013. "Strategic reward and altruistic punishment support cooperation in a public goods game experiment," Journal of Economic Psychology, Elsevier, vol. 35(C), pages 17-30.
  2. Cason, Timothy N. & Masters, William A. & Sheremeta, Roman M., 2010. "Entry into winner-take-all and proportional-prize contests: An experimental study," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 604-611, October.
  3. Edoardo Mollona & Andrea Marcozzi, 2009. "Self-emerging coordination mechanisms for knowledge integration processes," Mind and Society: Cognitive Studies in Economics and Social Sciences, Fondazione Rosselli, vol. 8(2), pages 223-241, December.
  4. Irlenbusch, Bernd & Ruchala, Gabriele K., 2006. "Relative Rewards within Team-Based Compensation," IZA Discussion Papers 2423, Institute for the Study of Labor (IZA).
  5. Kurtis Swope & Pamela Schmitt & John Cadigan & Patrick Wayland, 2011. "An Experimental Dynamic Public Goods Game with Carryover," Departmental Working Papers 32, United States Naval Academy Department of Economics.
  6. David Dickinson, 2001. "The Carrot vs. the Stick in Work Team Motivation," Experimental Economics, Springer, vol. 4(1), pages 107-124, June.
  7. Jeremy Clark, 2002. "Recognizing large donations to public goods: an experimental test," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(1), pages 33-44.
  8. Shupp, Robert & Sheremeta, Roman, 2013. "Resource Allocation Contests: Experimental Evidence," MPRA Paper 49889, University Library of Munich, Germany.
  9. Dutcher, E. Glenn & Saral, Krista Jabs, 2012. "Does Team Telecommuting Affect Productivity? An Experiment," MPRA Paper 41594, University Library of Munich, Germany.
  10. 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.
  11. Daniele Nosenzo & Martin Sefton, 2012. "Promoting Cooperation: the Distribution of Reward and Punishment Power," Discussion Papers 2012-08, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  12. Irlenbusch, Bernd & Ruchala, Gabriele K., 2008. "Relative rewards within team-based compensation," Labour Economics, Elsevier, vol. 15(2), pages 141-167, April.

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