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Hierarchy and Opportunism in Teams

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  • Potters, J.J.M.
  • Sefton, M.
  • Heijden, E.C.M. van der

    (Tilburg University, Center for Economic Research)

Abstract

We use experiments to compare two institutions for allocating the proceeds of team production.Under revenue-sharing, each team member receives an equal share of team output; under leader-determined shares, a team leader has the power to implement her own allocation.Both arrangements are vulnerable to opportunistic incentives: under revenuesharing team members have an incentive to free-ride, while under leader-determined shares leaders have an incentive to seize team output.We find that most leaders forego the temptation to appropriate team output and manage to curtail free-riding.As a result, compared to revenue-sharing, the presence of a team leader results in a significant improvement in team performance.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2005-109.

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Date of creation: 2005
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Handle: RePEc:dgr:kubcen:2005109

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Web page: http://center.uvt.nl

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Keywords: team production; leadership; opportunism; experiments;

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References

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Citations

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Cited by:
  1. Matthew Ellman & Paul Pezanis-Christou, 2010. "Organizational Structure, Communication, and Group Ethics," American Economic Review, American Economic Association, vol. 100(5), pages 2478-91, December.
  2. Emrah Arbak & Marie Claire Villeval, 2013. "Voluntary Leadership: Selection and Influence," Post-Print halshs-00664830, HAL.
  3. Stefan Grosse & Louis Putterman & Bettina Rockenbach, 2007. "Monitoring In Teams: A Model and Experiment on the Central Monitor Hypothesis," Working Papers 2007-4, Brown University, Department of Economics.
  4. Marcela Ibanez & Elke Schaffland, 2013. "The Effect of Outside Leaders on the Performance of the Organization: An Experiment," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 149, Courant Research Centre PEG.
  5. Emrah Arbak & Marie-Claire Villeval, 2013. "Voluntary leadership: motivation and influence," Social Choice and Welfare, Springer, vol. 40(3), pages 635-662, March.
  6. 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.
  7. Daniele Nosenzo & Theo Offerman & Martin Sefton & Ailko van der Veen, 2012. "Discretionary Sanctions and Reward in the Repeated Inspection Game," Discussion Papers 2012-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  8. Daniele Nosenzo & Theo Offerman & Martin Sefton & Ailko van der Veen, 2014. "Discretionary Sanctions and Rewards in the Repeated Inspection Game," Discussion Papers 2014-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  9. 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.

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