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Smarter Task Assignment or Greater Effort: the impact of incentives on team performance

  • Propper, Carol
  • von Hinke Kessler Scholder, Stephanie
  • Tominey, Emma
  • Ratto, Marisa
  • Burgess, Simon

We use an experiment to study the impact of team-based incentives, exploiting rich data from personnel records and management information systems. Using a triple difference design, we show that the incentive scheme had an impact on team performance, even with quite large teams. We examine whether this effect was due to increased effort from workers or strategic task reallocation. We find that the provision of financial incentives did raise individual performance but that managers also disproportionately reallocated efficient workers to the incentivised tasks. We show that this reallocation was the more important contributor to the overall outcome.

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File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/4727/1/Ratto%202009-03.pdf
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Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/4727.

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Date of creation: 2010
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Publication status: Published in The Economic Journal, 2010, Vol. 120, no. 547. pp. 968-989.Length: 21 pages
Handle: RePEc:dau:papers:123456789/4727
Contact details of provider: Web page: http://www.dauphine.fr/en/welcome.html

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  1. Ratto, Marisa & Tominey, Emma & Propper, Carol & Burgess, Simon M., 2012. "Incentives in the Public Sector: Evidence from a Government Agency," Economics Papers from University Paris Dauphine 123456789/12197, Paris Dauphine University.
  2. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
  3. Gaynor, Martin & Pauly, Mark V, 1990. "Compensation and Productive Efficiency of Partnerships: Evidence from Medical Group Practice," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 544-73, June.
  4. 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 49, Carnegie Mellon University, Tepper School of Business.
  5. Knez, Marc & Simester, Duncan, 2001. "Firm-Wide Incentives and Mutual Monitoring at Continental Airlines," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 743-72, October.
  6. Edward P. Lazear, 1996. "Performance Pay and Productivity," NBER Working Papers 5672, National Bureau of Economic Research, Inc.
  7. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers 90-07, Rochester, Business - Managerial Economics Research Center.
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