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Real Effort, Real Leisure and Real-time Supervision: Incentives and Peer Pressure in Virtual Organizations

  • Brice Corgnet

    ()

    (Economic Science Institute, Chapman University)

  • Roberto Hernán-González

    (Economic Science Institute, Chapman University)

  • Stephen Rassenti

    (Economic Science Institute, Chapman University)

We propose a novel approach to the analysis of organizations by developing a computerized platform that reproduces relevant features of existing organizations such as real-effort tasks and real-leisure alternative activities (Internet). In this environment, we find strong incentives effects as organizations using individual incentives significantly outperform those relying on team incentives. Combining real-time peer monitoring with team incentives, we report striking evidence of positive peer effects as production increases by 50% and Internet usage decreases by 54% compared with organizations using team incentives alone. Peer monitoring allows virtual organizations using team incentives to perform as well as those using individual incentives. However, the positive effect of peer monitoring does not apply to low performers.

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Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 11-05.

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Length: 82 pages
Date of creation: 2011
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Handle: RePEc:chu:wpaper:11-05
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