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Competitive versus cooperative incentives in team production with heterogeneous agents

Author

Listed:
  • E. Glenn Dutcher
  • Regine Oexl
  • Dmitry Ryvkin
  • Tim Salmon

Abstract

A debate among practicing managers is whether to use cooperative or competitive incentives for team production. While competitive incentives may drive individual effort higher, they may also lead to less help and more sabotage; an issue exacerbated when team members' abilities are varied. Using a lab experiment, we examine how increasing competitive incentives affects performance as team composition changes. We find that competitive incentives generally underperform noncompetitive incentives and a larger bonus does not generate enough effort to compensate for a loss in help. Our results help understand better how to balance out individual versus team rewards and how firms could structure teams when employees have heterogeneous abilities.

Suggested Citation

  • E. Glenn Dutcher & Regine Oexl & Dmitry Ryvkin & Tim Salmon, 2021. "Competitive versus cooperative incentives in team production with heterogeneous agents," Working Papers 2021-26, Faculty of Economics and Statistics, Universität Innsbruck.
    • Handle: RePEc:inn:wpaper:2021-26
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    References listed on IDEAS

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    More about this item

    Keywords

    contest; help and sabotage; team composition; incentive structure;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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