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The effect of communication in incentive systems-an experimental study

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  • Christine Harbring

    (Department of Personnel Economics and Human Resource Management, University of Cologne, Herbert-Lewin-Str. 2, D-50931 Köln, Germany)

Abstract

In organizational theory, it is a widely accepted postulate that cooperation among subjects is enforceable. This assumption is essential for the evaluation of two frequently discussed incentive systems: team and tournament compensation. Whereas in team-based pay systems cooperation is highly desired, cooperation in rank-order tournaments-labeled as 'collusion'-is regarded as one of the main drawbacks of relative performance evaluation. In this experimental study, two different communication technologies are introduced into both incentive environments. The results indicate that when only limited communication is permitted subjects tend to cheat on each other in the tournament rather than in the team setting. Interestingly, allowing subjects to exchange emails leads to a similarly stable cooperation in both incentive systems. Copyright © 2006 John Wiley & Sons, Ltd.

Suggested Citation

  • Christine Harbring, 2006. "The effect of communication in incentive systems-an experimental study," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(5), pages 333-353.
    • Handle: RePEc:wly:mgtdec:v:27:y:2006:i:5:p:333-353
    DOI: 10.1002/mde.1266
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    3. Vasilaky, Kathryn N. & Islam, Asif M., 2018. "Competition or cooperation? Using team and tournament incentives for learning among female farmers in rural Uganda," World Development, Elsevier, vol. 103(C), pages 216-225.
    4. Fu, Qiang & Ke, Changxia & Tan, Fangfang, 2015. "“Success breeds success” or “Pride goes before a fall”?," Games and Economic Behavior, Elsevier, vol. 94(C), pages 57-79.
    5. Majerczyk, Michael & Sheremeta, Roman & Tian, Yu, 2019. "Adding tournament to tournament: Combining between-team and within-team incentives," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 1-11.
    6. Andrew H. Newman & Ivo D. Tafkov & Flora Hailan Zhou, 2020. "The Effects of Incentive Scheme and Task Difficulty on Employees' Altruistic Behavior Outside the Firm†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(3), pages 1512-1535, September.
    7. Harbring, Christine & Irlenbusch, Bernd, 2009. "Sabotage in Tournaments: Evidence from a Laboratory Experiment," IZA Discussion Papers 4205, Institute of Labor Economics (IZA).
    8. Sutter, Matthias & Strassmair, Christina, 2009. "Communication, cooperation and collusion in team tournaments--An experimental study," Games and Economic Behavior, Elsevier, vol. 66(1), pages 506-525, May.
    9. Julian Conrads & Tommaso Reggiani, 2017. "The effect of communication channels on promise-making and promise-keeping: experimental evidence," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(3), pages 595-611, October.
    10. Christine Harbring & Bernd Irlenbusch, 2011. "Sabotage in Tournaments: Evidence from a Laboratory Experiment," Management Science, INFORMS, vol. 57(4), pages 611-627, April.
    11. Kelly, Khim & Presslee, Adam, 2017. "Tournament group identity and performance: The moderating effect of winner proportion," Accounting, Organizations and Society, Elsevier, vol. 56(C), pages 21-34.
    12. Eisenkopf, Gerald, 2016. "Communication and Conflict Management," VfS Annual Conference 2016 (Augsburg): Demographic Change 145634, Verein für Socialpolitik / German Economic Association.
    13. Gerald Eisenkopf, 2015. "Communication and conflict management," Working Paper Series of the Department of Economics, University of Konstanz 2015-21, Department of Economics, University of Konstanz.
    14. Eisenkopf, Gerald, 2018. "The long-run effects of communication as a conflict resolution mechanism," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 121-136.
    15. Steven Jacob Bosworth & Simon Bartke, 2019. "Cross-task spillovers in workplace teams: Motivation vs. learning," Economics Discussion Papers em-dp2019-15, Department of Economics, University of Reading.
    16. Eisenkopf, Gerald, 2019. "Partisan lobbyists in conflicts," European Journal of Political Economy, Elsevier, vol. 60(C).

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