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Team Incentives and Leadership

Author

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  • Michalis Drouvelis

    (Department of Economics, University of Birmingham.)

  • Daniele Nosenzo

    () (Department of Economics, University of Nottingham.)

  • Martin Sefton

    () (Department of Economics, University of Nottingham.)

Abstract

We study, experimentally, how two alternative incentive mechanisms affect team performance, and how a team chooses between alternative mechanisms. We study a group incentive mechanism, where team output is shared equally among team members, and a hierarchical mechanism team output is allocated by a team leader. Our experiment examines these mechanisms in both homogeneous teams, where workers have identical productivities and in heterogeneous teams, where workers vary in their productivity. Our results are robust to whether teams are homogeneous or heterogeneous. We find that output is higher when a leader has the power to allocate output, but this mechanism also generates large differences between earnings of leaders and other team members. When team members can choose how much of team output is to be shared equally and how much is to be allocated by a leader, they tend to restrict the leader’s power to distributing less than half of the pie.

Suggested Citation

  • Michalis Drouvelis & Daniele Nosenzo & Martin Sefton, 2015. "Team Incentives and Leadership," Discussion Papers 2015-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  • Handle: RePEc:not:notcdx:2015-05
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    1. repec:eee:joepsy:v:62:y:2017:i:c:p:173-185 is not listed on IDEAS
    2. Drouvelis, Michalis & Nosenzo, Daniele & Sefton, Martin, 2017. "Team incentives and leadership," Journal of Economic Psychology, Elsevier, pages 173-185.

    More about this item

    Keywords

    Team Production; Leadership; Reward Power; Delegation; Experiment;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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