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Letting Down the Team? Evidence of Social Effects of Team Incentives

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  • Philip Babcock
  • Kelly Bedard
  • Gary Charness
  • John Hartman
  • Heather Royer

Abstract

This paper estimates social effects of incentivizing people in teams. In two field experiments featuring exogenous team formation and opportunities for repeated social interactions, we find large team effects that operate through social channels. The team compensation system induced agents to choose effort as if they valued a marginal dollar of compensation for their teammate from two-thirds as much (in one study) to twice as much as they valued a dollar of their own compensation (in the other study). We conclude that social effects of monetary team incentives exist and can induce effort at lower cost than through direct individual payment.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16687.

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Date of creation: Jan 2011
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Handle: RePEc:nbr:nberwo:16687

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  1. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, Elsevier, Elsevier.
  2. Heather Royer & Mark F. Stehr & Justin R. Sydnor, 2012. "Incentives, Commitments and Habit Formation in Exercise: Evidence from a Field Experiment with Workers at a Fortune-500 Company," NBER Working Papers 18580, National Bureau of Economic Research, Inc.
  3. 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, Carnegie Mellon University, Tepper School of Business 49, Carnegie Mellon University, Tepper School of Business.
  4. Emre Ozdenoren & Stephen Salant & Dan Silverman, 2006. "Willpower and the Optimal Control of Visceral Urges," Economics Working Papers, Institute for Advanced Study, School of Social Science 0069, Institute for Advanced Study, School of Social Science.
  5. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 120(3), pages 917-962, August.
  6. Nava Ashraf & Dean Karlan & Wesley Yin, 2006. "Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 121(2), pages 635-672, May.
  7. Gary Bornstein & Uri Gneezy & Rosemarie Nagel, 1999. "The effect of intergroup competition on group coordination: An experimental study," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 393, Department of Economics and Business, Universitat Pompeu Fabra.
  8. Claude Meidinger & Jean-Louis Rullière & Marie Claire Villeval, 2001. "Does Team-Based Compensation Give Rise to Problems when Agents Vary in their Ability ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL halshs-00179979, HAL.
  9. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2009. "Social Incentives in the Workplace," IZA Discussion Papers 4190, Institute for the Study of Labor (IZA).
  10. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(3), pages 715-753, August.
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  12. Pierpaolo Battigalli & Martin Dufwenberg, 2005. "Dynamic Psychological Games," Levine's Bibliography 784828000000000046, UCLA Department of Economics.
  13. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(2), pages 443-77, May.
  14. Stefano DellaVigna & Ulrike Malmendier, 2006. "Paying Not to Go to the Gym," American Economic Review, American Economic Association, American Economic Association, vol. 96(3), pages 694-719, June.
  15. W. Pesendorfer & F. Gul, 1999. "Temptation and Self-Control," Princeton Economic Theory Papers, Economics Department, Princeton University 99f1, Economics Department, Princeton University.
  16. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(4), pages 801-17, August.
  17. Pierpaolo Battigalli & Martin Dufwenberg, 2007. "Guilt in Games," American Economic Review, American Economic Association, American Economic Association, vol. 97(2), pages 170-176, May.
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Citations

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Cited by:
  1. Cornelissen, Thomas & Dustmann, Christian & Schönberg, Uta, 2013. "Peer Effects in the Workplace," IZA Discussion Papers 7617, Institute for the Study of Labor (IZA).
  2. Kuhn, Peter J. & Villeval, Marie Claire, 2011. "Do Women Prefer a Co-operative Work Environment?," IZA Discussion Papers 5999, Institute for the Study of Labor (IZA).
  3. Georganas, Sotiris & Tonin, Mirco & Vlassopoulos, Michael, 2013. "Peer Pressure and Productivity: The Role of Observing and Being Observed," IZA Discussion Papers 7523, Institute for the Study of Labor (IZA).
  4. Dahl, Gordon B. & Løken, Katrine V. & Mogstad, Magne, 2012. "Peer Effects In Program Participation," Working Papers in Economics, University of Bergen, Department of Economics 12/12, University of Bergen, Department of Economics.
  5. Heather Royer & Mark F. Stehr & Justin R. Sydnor, 2012. "Incentives, Commitments and Habit Formation in Exercise: Evidence from a Field Experiment with Workers at a Fortune-500 Company," NBER Working Papers 18580, National Bureau of Economic Research, Inc.
  6. Peter J. Kuhn & Marie-Claire Villeval, 2013. "Are Women More Attracted to Cooperation Than Men?," NBER Working Papers 19277, National Bureau of Economic Research, Inc.
  7. Aakvik, Arild & Hansen, Frank & Torsvik, Gaute, 2013. "Dynamic Peer Effects in Sales Teams," Working Papers in Economics, University of Bergen, Department of Economics 10/13, University of Bergen, Department of Economics.

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