IDEAS home Printed from https://ideas.repec.org/a/bla/jeurec/v13y2015i5p841-870.html
   My bibliography  Save this article

Letting Down The Team? Social Effects Of Team Incentives

Author

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

Abstract

This paper estimates social effects of incentivizing people in teams. In three field experiments featuring exogenous team formation and opportunities for repeated social interactions, we find large team effects that operate through social channels. In particular, assignment to a team treatment increases productivity by 9%–17% relative to an individual incentive treatment, even though the individual incentive yields a higher private return. Further, we find that in a choice treatment individuals overwhelmingly prefer the individual incentive to the team incentive, despite the latter being more effective. These results are most consistent with the team effects operating through guilt or social pressure as opposed to pure altruism.

Suggested Citation

  • Philip Babcock & Kelly Bedard & Gary Charness & John Hartman & Heather Royer, 2015. "Letting Down The Team? Social Effects Of Team Incentives," Journal of the European Economic Association, European Economic Association, vol. 13(5), pages 841-870, October.
  • Handle: RePEc:bla:jeurec:v:13:y:2015:i:5:p:841-870
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/jeea.12131
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 817-869.
    2. Emre Ozdenoren & Stephen W. Salant & Dan Silverman, 2012. "Willpower And The Optimal Control Of Visceral Urges," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 342-368, April.
    3. Dufwenberg, Martin & Gneezy, Uri, 2000. "Measuring Beliefs in an Experimental Lost Wallet Game," Games and Economic Behavior, Elsevier, vol. 30(2), pages 163-182, February.
    4. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2010. "Social Incentives in the Workplace," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 417-458.
    5. David J. Zimmerman, 2003. "Peer Effects in Academic Outcomes: Evidence from a Natural Experiment," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 9-23, February.
    6. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
    7. Philip Babcock & Mindy Marks, 2011. "The Falling Time Cost of College: Evidence from Half a Century of Time Use Data," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 468-478, May.
    8. Carrell, Scott E. & Hoekstra, Mark & West, James E., 2011. "Is poor fitness contagious?: Evidence from randomly assigned friends," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 657-663, August.
    9. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 917-962.
    10. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    11. David K. Levine & Drew Fudenberg, 2006. "A Dual-Self Model of Impulse Control," American Economic Review, American Economic Association, vol. 96(5), pages 1449-1476, December.
    12. David Card & Alexandre Mas & Enrico Moretti & Emmanuel Saez, 2012. "Inequality at Work: The Effect of Peer Salaries on Job Satisfaction," American Economic Review, American Economic Association, vol. 102(6), pages 2981-3003, October.
    13. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-817, August.
    14. Burger, Nicholas & Charness, Gary & Lynham, John, 2011. "Field and online experiments on self-control," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 393-404, March.
    15. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
    16. Scott E. Carrell & Richard L. Fullerton & James E. West, 2009. "Does Your Cohort Matter? Measuring Peer Effects in College Achievement," Journal of Labor Economics, University of Chicago Press, vol. 27(3), pages 439-464, July.
    17. Uri Gneezy & Stephan Meier & Pedro Rey-Biel, 2011. "When and Why Incentives (Don't) Work to Modify Behavior," Journal of Economic Perspectives, American Economic Association, vol. 25(4), pages 191-210, Fall.
    18. Michael Kremer & Edward Miguel & Rebecca Thornton, 2009. "Incentives to Learn," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 437-456, August.
    19. Gary Charness & Uri Gneezy, 2009. "Incentives to Exercise," Econometrica, Econometric Society, vol. 77(3), pages 909-931, May.
    20. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
    21. Bruce Sacerdote, 2001. "Peer Effects with Random Assignment: Results for Dartmouth Roommates," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 681-704.
    22. Ted O'Donoghue & Matthew Rabin, 2001. "Choice and Procrastination," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 121-160.
    23. David Card & Alex Mas & Enrico Moretti & Emmanuel Saez, 2010. "Inequality at Work: The Effect of Peer Salaries on Job Satisfaction," Working Papers 1269, Princeton University, Department of Economics, Industrial Relations Section..
    24. Eric P. Bettinger, 2012. "Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 686-698, August.
    25. 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.
    26. Philip Oreopoulos & Daniel Lang & Joshua Angrist, 2009. "Incentives and Services for College Achievement: Evidence from a Randomized Trial," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 136-163, January.
    27. Bolton, Gary E, 1991. "A Comparative Model of Bargaining: Theory and Evidence," American Economic Review, American Economic Association, vol. 81(5), pages 1096-1136, December.
    28. Roland Benabou and Jean Tirole, 2004. "Willpower and Personal Rules," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 848-886, August.
    29. Nalbantian, Haig R & Schotter, Andrew, 1995. "Matching and Efficiency in the Baseball Free-Agent System: An Experimental Examination," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 1-31, January.
    30. Battigalli, Pierpaolo & Dufwenberg, Martin, 2009. "Dynamic psychological games," Journal of Economic Theory, Elsevier, vol. 144(1), pages 1-35, January.
    31. Roland G. Fryer, Jr, 2010. "Financial Incentives and Student Achievement: Evidence from Randomized Trials," NBER Working Papers 15898, National Bureau of Economic Research, Inc.
    32. Gary Charness & Martin Dufwenberg, 2006. "Promises and Partnership," Econometrica, Econometric Society, vol. 74(6), pages 1579-1601, November.
    33. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, Elsevier.
    34. Michael Kremer & Dan Levy, 2008. "Peer Effects and Alcohol Use among College Students," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 189-206, Summer.
    35. 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, Oxford University Press, vol. 121(2), pages 635-672.
    36. Foster, Gigi, 2006. "It's not your peers, and it's not your friends: Some progress toward understanding the educational peer effect mechanism," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1455-1475, September.
    37. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    38. Stefano DellaVigna & Ulrike Malmendier, 2006. "Paying Not to Go to the Gym," American Economic Review, American Economic Association, vol. 96(3), pages 694-719, June.
    39. David S. Lyle, 2007. "Estimating and Interpreting Peer and Role Model Effects from Randomly Assigned Social Groups at West Point," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 289-299, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rohde, Kirsten I.M. & Verbeke, Willem, 2017. "We like to see you in the gym—A field experiment on financial incentives for short and long term gym attendance," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 388-407.
    2. Angelucci, Manuela & Prina, Silvia & Royer, Heather & Samek, Anya, 2015. "When Incentives Backfire: Spillover Effects in Food Choice," IZA Discussion Papers 9288, Institute for the Study of Labor (IZA).
    3. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2015. "Endogenous group formation in experimental contests," European Economic Review, Elsevier, vol. 74(C), pages 163-189.
    4. Georganas, Sotiris & Tonin, Mirco & Vlassopoulos, Michael, 2015. "Peer pressure and productivity: The role of observing and being observed," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 223-232.
    5. repec:eee:soceco:v:70:y:2017:i:c:p:23-32 is not listed on IDEAS
    6. Biener, Christian & Eling, Martin & Landmann, Andreas & Pradhan, Shailee, 2018. "Can group incentives alleviate moral hazard? The role of pro-social preferences," European Economic Review, Elsevier, vol. 101(C), pages 230-249.
    7. Delfgaauw, Josse & Dur, Robert & Souverijn, Michiel, 2017. "Team Incentives, Task Assignment, and Performance: A Field Experiment," IZA Discussion Papers 11228, Institute for the Study of Labor (IZA).
    8. William Gilje Gjedrem & Ola Kvaløy, 2018. "Relative Performance Feedback to Teams," CESifo Working Paper Series 6871, CESifo Group Munich.
    9. Ana María Díaz & Ignacio Penagos, 2018. "It is not what you know but who you know: Heterogenous peer efects in education," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, vol. 80(2), pages 53-88, February.
    10. Gary Charness & Matthias Sutter, 2012. "Groups Make Better Self-Interested Decisions," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 157-176, Summer.
    11. Kräkel, Matthias & Nieken, Petra, 2015. "Relative performance pay in the shadow of crisis," European Economic Review, Elsevier, vol. 74(C), pages 244-268.
    12. Gall, Thomas & Hu, Xiaocheng & Vlassopoulos, Michael, 2016. "Dynamic Incentive Effects of Team Formation: Experimental Evidence," IZA Discussion Papers 10393, Institute for the Study of Labor (IZA).
    13. Mariana Carrera & Heather Royer & Mark F. Stehr & Justin R. Sydnor, 2017. "The Structure of Health Incentives: Evidence from a Field Experiment," NBER Working Papers 23188, National Bureau of Economic Research, Inc.
    14. Tomas Sjöström & Levent Ülkü & Radovan Vadovic, 2017. "Free to Choose: Testing the Pure Motivation Effect of Autonomous Choice," Carleton Economic Papers 17-11, Carleton University, Department of Economics.
    15. Youjin Hahn & Asadul Islam & Eleonora Patacchini & Yves Zenou, 2015. "Teams, Organization and Education Outcomes: Evidence from a field experiment in Bangladesh," Monash Economics Working Papers 35-15, Monash University, Department of Economics.
    16. Köhler, Katrin & Pagel, Beatrice & Rau, Holger A., 2015. "How worker participation affects reciprocity under minimum remuneration policies: Experimental evidence," Center for European, Governance and Economic Development Research Discussion Papers 267, University of Goettingen, Department of Economics.
    17. Cappelen, Alexander W & Charness, Gary & Ekström, Mathias & Gneezy, Uri & Tungodden, Bertil, 2017. "Exercise Improves Academic Performance," Working Paper Series 1180, Research Institute of Industrial Economics.
    18. Hahn, Youjin & Hassani Mahmooei, Behrooz & Islam, Asadul & Patacchini, Eleonora & Zenou, Yves, 2016. "Do Friends Improve Female Education? The Case of Bangladesh," CEPR Discussion Papers 11615, C.E.P.R. Discussion Papers.
    19. repec:eee:labeco:v:46:y:2017:i:c:p:110-117 is not listed on IDEAS

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jeurec:v:13:y:2015:i:5:p:841-870. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/eeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.