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Letting Down the Team? Evidence of Social Effects of Team Incentives

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

This paper estimates social effects of incentivizing people in teams. In two field experiments featuring exogenous team formation and opportunities for repeated social interactions, we find large team effects that operate through social channels. The team compensation system induced agents to choose effort as if they valued a marginal dollar of compensation for their teammate from two-thirds as much (in one study) to twice as much as they valued a dollar of their own compensation (in the other study). We conclude that social effects of monetary team incentives exist and can induce effort at lower cost than through direct individual payment.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16687.

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Date of creation: Jan 2011
Date of revision:
Handle: RePEc:nbr:nberwo:16687
Note: HC HE
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. Gary Charness & Peter J. Kuhn, 2010. "Lab Labor: What Can Labor Economists Learn from the Lab?," NBER Working Papers 15913, National Bureau of Economic Research, Inc.
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  13. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 917-962, August.
  14. Heather Royer & Mark F. Stehr & Justin R. Sydnor, 2012. "Incentives, Commitments and Habit Formation in Exercise: Evidence from a Field Experiment with Workers at a Fortune-500 Company," NBER Working Papers 18580, National Bureau of Economic Research, Inc.
  15. Pierpaolo Battigalli & Martin Dufwenberg, 2007. "Guilt in Games," American Economic Review, American Economic Association, vol. 97(2), pages 170-176, May.
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  17. Pierpaolo Battigalli & Martin Dufwenberg, 2005. "Dynamic Psychological Games," Levine's Bibliography 784828000000000046, UCLA Department of Economics.
  18. Leibowitz, Arleen & Tollison, Robert, 1980. "Free Riding, Shirking, and Team Production in Legal Partnerships," Economic Inquiry, Western Economic Association International, vol. 18(3), pages 380-94, July.
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