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The Evolution Of Cooperation In Business: Individual Vs. Group Incentives

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  • Daniel Ladley

    ()

  • Ian Wilkinson
  • Louise Young

Abstract

Cooperative relations, within and between firms, play important roles in business. How to produce such relations, however, is less well understood. Building on work in evolutionary biology we examine the conditions under which group based incentives result in better performance than individual based incentives. We find that when individual and group interests are not aligned, group incentive systems lead to both higher group and individual performance. Hybrid reward systems, with both group and individual components, are found on average to be inferior to pure group based systems, but superior for some specific cases.

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Bibliographic Info

Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 13/14.

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Date of creation: Jul 2013
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Handle: RePEc:lec:leecon:13/14

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Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
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Keywords: Emergence of cooperation; Incentive systems; Iterated games; Group selection;

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