Technology, team production and incentives
Incentive reversal (IR) is when higher rewards induce some agents to reduce their effort (Winter, 2009). We show that IR can hold for all agents when: there is an improvement in production technology; and rewards are based on team output. Whilst IR requires at least one worker's marginal return to be decreasing in team productivity when agents invest simultaneously, this is not necessary with sequential investments. Rather, IR can occur with sequential investment when the marginal return of effort for all agents is increasing with improvements in technology.
|Date of creation:||Oct 2015|
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- Eyal Winter, 2004.
"Incentives and Discrimination,"
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American Economic Association, vol. 94(3), pages 764-773, June.
- Eyal Winter, 2003. "Incentives and Discrimination," Discussion Paper Series dp313, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
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- Eyal Winter, 2009. "Incentive Reversal," American Economic Journal: Microeconomics, American Economic Association, vol. 1(2), pages 133-147, August.
- Eyal Winter, 2007. "Incentive Reversal," Levine's Working Paper Archive 122247000000001525, David K. Levine.
- Eyal Winter, 2007. "Incentive Reversal," Levine's Working Paper Archive 843644000000000241, David K. Levine.
- Roland Bel, 2013. "Access, Veto, and Ownership in the Theory of the Firm," Journal of Law, Economics and Organization, Oxford University Press, vol. 29(4), pages 871-897, August.
- Ilya Segal, 2003. "Collusion, Exclusion, and Inclusion in Random-Order Bargaining," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 439-460.
- Eyal Winter, 2006. "Optimal incentives for sequential production processes," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 376-390, June.
- Klor, Esteban F. & Kube, Sebastian & Winter, Eyal & Zultan, Ro’i, 2014. "Can higher rewards lead to less effort? Incentive reversal in teams," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 72-83.
- Esteban Klor & Sebastian Kube & Eyal Winter & Ro'i Zultan, 2013. "Can Higher Rewards Lead To Less Effort? Incentive Reversal In Teams," Working Papers 1309, Ben-Gurion University of the Negev, Department of Economics.
- Bel, Roland & Smirnov, Vladimir & Wait, Andrew, 2015. "Team composition, worker effort and welfare," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 1-8.
- Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
- Bengt Holmstrom, 1981. "Moral Hazard in Teams," Discussion Papers 471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Shai Bernstein & Eyal Winter, 2012. "Contracting with Heterogeneous Externalities," American Economic Journal: Microeconomics, American Economic Association, vol. 4(2), pages 50-76, May.
- Maxim Mai & Vladimir Smirnov & Andrew Wait, 2014. "Ownership, Access, and Sequential Investment," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 203-231, February.
- Mai, Maxim & Smirnov, Vladimir & Wait, Andrew, 2011. "Ownership, access and sequential investment," Working Papers 2011-09, University of Sydney, School of Economics.
- Ilya Segal, 1999. "Complexity and Renegotiation: A Foundation for Incomplete Contracts," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 57-82. Full references (including those not matched with items on IDEAS)
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