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Hierarchy and opportunism in teams

  • van der Heijden, Eline
  • Potters, Jan
  • Sefton, Martin

We use an experiment to compare two institutions for allocating the proceeds of team production. Under revenue-sharing, each team member receives an equal share of team output; under leader-determined shares, a team leader has the power to implement her own allocation. Both arrangements are vulnerable to opportunistic incentives: under revenue-sharing team members have an incentive to free ride, while under leader-determined shares leaders have an incentive to seize team output. We find that most leaders forego the temptation to appropriate team output and manage to curtail free riding. As a result, compared to revenue-sharing, the presence of a team leader results in a significant improvement in team performance.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 69 (2009)
Issue (Month): 1 (January)
Pages: 39-50

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Handle: RePEc:eee:jeborg:v:69:y:2009:i:1:p:39-50
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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