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Smarter Task Assignment or Greater Effort: the impact of incentives on team performance

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Author Info

  • Propper, Carol
  • von Hinke Kessler Scholder, Stephanie
  • Tominey, Emma
  • Ratto, Marisa
  • Burgess, Simon

Abstract

We use an experiment to study the impact of team-based incentives, exploiting rich data from personnel records and management information systems. Using a triple difference design, we show that the incentive scheme had an impact on team performance, even with quite large teams. We examine whether this effect was due to increased effort from workers or strategic task reallocation. We find that the provision of financial incentives did raise individual performance but that managers also disproportionately reallocated efficient workers to the incentivised tasks. We show that this reallocation was the more important contributor to the overall outcome.

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File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/4727/1/Ratto%202009-03.pdf
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Bibliographic Info

Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/4727.

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Date of creation: 2010
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Publication status: Published in Economic Journal, 2010, Vol. 120, no. 547. pp. 968-989.Length: 21 pages
Handle: RePEc:dau:papers:123456789/4727

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Web page: http://www.dauphine.fr/en/welcome.html
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Related research

Keywords: Public Sector; Incentives; Performance; Teams;

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References

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  1. William E. Encinosa, III & Martin Gaynor & James B. Rebitzer, . "The Sociology of Groups and the Economics of Incentives: Theory and Evidence on Compensation Systems," GSIA Working Papers 49, Carnegie Mellon University, Tepper School of Business.
  2. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
  3. Gaynor, Martin & Pauly, Mark V, 1990. "Compensation and Productive Efficiency of Partnerships: Evidence from Medical Group Practice," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 544-73, June.
  4. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers 90-07, Rochester, Business - Managerial Economics Research Center.
  5. Burgess, Simon & Propper, Carol & Ratto, Marisa & Tominey, Emma, 2012. "Incentives in the Public Sector: Evidence from a Government Agency," CEPR Discussion Papers 9071, C.E.P.R. Discussion Papers.
  6. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
  7. Knez, Marc & Simester, Duncan, 2001. "Firm-Wide Incentives and Mutual Monitoring at Continental Airlines," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 743-72, October.
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Cited by:
  1. Nick Bloom & John Van Reenen, 2010. "Human resource management and productivity," LSE Research Online Documents on Economics 28730, London School of Economics and Political Science, LSE Library.
  2. Hartmut Egger & Michael Koch, 2013. "Trade and the Firm-Internal Allocation of Workers to Tasks," Working Papers 139, Bavarian Graduate Program in Economics (BGPE).
  3. Burgess, Simon & Propper, Carol & Ratto, Marisa & Tominey, Emma, 2012. "Incentives in the Public Sector: Evidence from a Government Agency," IZA Discussion Papers 6738, Institute for the Study of Labor (IZA).
  4. Ratto, Marisa & Tominey, Emma & Vergé, Thibaud, 2012. "Team Structure and the Effectiveness of Collective Performance Pay," IZA Discussion Papers 6747, Institute for the Study of Labor (IZA).
  5. Hasnain, Zahid & Manning, Nick & Pierskalla Henryk, 2012. "Performance-related pay in the public sector : a review of theory and evidence," Policy Research Working Paper Series 6043, The World Bank.
  6. Ana-Maria Godeanu, 2012. "The antecedents of satisfaction with pay in teams: do performance-based compensation and autonomy keep team-members satisfied?," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 145-168, June.

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