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Dynamic Peer Effects in Sales Teams

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  • Aakvik, Arild

    ()
    (Department of Economics, University of Bergen)

  • Hansen, Frank
  • Torsvik, Gaute

    ()
    (Department of Economics, University of Bergen)

Abstract

This paper investigates dynamic peer effects in a sales company where workers operate in teams and receive a bonus that depends on both individual worker and team sales. We examine how the past productivity of co-workers affects the current individual performance of team members. To address this question, we employ weekly productivity and administrative data obtained from the customer service center of an insurance company. We find evidence that the past performance of team co-workers influences current performance, and that this effect is larger for agents that ranked in the bottom quartile of team performance in the previous period. The effects are also strongest when bonuses depend on team performance. Overall, our findings suggest that peer effects may alleviate the free-rider problem often associated with team bonuses.

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Bibliographic Info

Paper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 10/13.

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Length: 35 pages
Date of creation: 01 Nov 2013
Date of revision:
Handle: RePEc:hhs:bergec:2013_010

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Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
Phone: (+47)55589200
Fax: (+47)55589210
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Web page: http://www.uib.no/econ/en
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Related research

Keywords: Peer effects; dynamic panel data; team incentives; sales organizations;

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References

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  1. Armin Falk & Andrea Ichino, 2006. "Clean Evidence on Peer Effects," Journal of Labor Economics, University of Chicago Press, vol. 24(1), pages 39-58, January.
  2. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  3. Arellano, M., 1989. "A Note On The Anderson-Hsiao Estimator For Panel Data," Economics Series Working Papers 9975, University of Oxford, Department of Economics.
  4. Dahl, Gordon B. & Løken, Katrine V. & Mogstad, Magne, 2012. "Peer Effects In Program Participation," Working Papers in Economics 12/12, University of Bergen, Department of Economics.
  5. Joshua Herries & Daniel I. Rees & Jeffrey S. Zax, 2003. "Interdependence in worker productivity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 585-604.
  6. Hesselius, Patrik & Johansson, Per & Nilsson, Peter, 2009. "Sick of Your Colleagues' Absence?," IZA Discussion Papers 3960, Institute for the Study of Labor (IZA).
  7. Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2012. "Social norms and economic incentives in firms," Journal of Economic Behavior & Organization, Elsevier, vol. 83(2), pages 173-185.
  8. Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers 040, Institute for Empirical Research in Economics - University of Zurich.
  9. Barron, John M & Gjerde, Kathy Paulson, 1997. "Peer Pressure in an Agency Relationship," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 234-54, April.
  10. 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.
  11. Orana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social preferences and the response to incentives: Evidence from personnel data," Natural Field Experiments 00212, The Field Experiments Website.
  12. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
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