Incentives for Helping on the Job: Theory and Evidence
Recent advances in incentive theory stress the multi- dimensional nature of agent effort and particularly the case where workers can improve the performance of others through `helping' efforts. This paper provides a simple model of an agent's incentive to help depending on the compensation package, the cost of monitoring, and the allocation of tasks. We then analyze the determinants of reported helping efforts within workgroups for a sample of Australian workers. As expected, workers are less likely to help one another when promotion incentives are strong. Subsidiary results are consistent with our `contest' interpretation of this finding and not consistent with `gift exchange' or other variants of the efficiency wage hypothesis. Also as predicted, a wide range of job tasks amplifies the negative effect of promotional incentives, while monitoring of help mitigates the negative effect. We find an unexpected positive effect of piece rates on helping effort for long-term employees which we show is consistent with repeated game effects between workers. These considerations do not overturn our findings about the effects of tournaments.(JEL J33)
|Date of creation:||18 Feb 1994|
|Date of revision:||29 Mar 1994|
|Note:||32 pages text, 4 pages tables, WordPerfect 5.1 file. VVdecode then Unzip to read. Paper substantially revised, mainly to deal with possibility of efficiency wage effects and to incorporate simulations.|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Baker, G.P. & Jensen, M.C. & Murphy, K.J., 1988.
"Compensation And Incentives: Practice Vs. Theory,"
88-05, Rochester, Business - Managerial Economics Research Center.
- Bengt Holmstrom, 1981.
"Moral Hazard in Teams,"
471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Ronald G. Ehrenberg & Michael L. Bognanno, 1990. "The Incentive Effects of Tournaments Revisited: Evidence from the European PGA Tour," ILR Review, Cornell University, ILR School, vol. 43(3), pages 74, April.
- Main, Brian G M & O'Reilly, Charles A, III & Wade, James, 1993. "Top Executive Pay: Tournament or Teamwork?," Journal of Labor Economics, University of Chicago Press, vol. 11(4), pages 606-628, October.
- Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, vol. 59(3), pages 611-636, May.
- Baker, George & Gibbs, Michael & Holmstrom, Bengt, 1993. "Hierarchies and compensation: A case study," European Economic Review, Elsevier, vol. 37(2-3), pages 366-378, April.
- repec:sae:ilrrev:v:43:y:1990:i:3:p:74-88 is not listed on IDEAS
- Sherwin Rosen, 1985.
"Prizes and Incentives in Elimination Tournaments,"
NBER Working Papers
1668, National Bureau of Economic Research, Inc.
- Lazear, Edward P & Rosen, Sherwin, 1981.
"Rank-Order Tournaments as Optimum Labor Contracts,"
Journal of Political Economy,
University of Chicago Press, vol. 89(5), pages 841-864, October.
- George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 543-569.
- Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-580, June.
- Ramakrishnan, Ram T S & Thakor, Anjan V, 1991. "Cooperation versus Competition in Agency," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(2), pages 248-283, Fall.
- Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
- Garvey, Gerald T & Swan, Peter L, 1992. "Managerial Objectives, Capital Structure, and the Provision of Worker Incentives," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 357-379, October.
- Malcomson, James M, 1984. "Work Incentives, Hierarchy, and Internal Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 486-507, June.
- Rebecca S. Demsetz, 1993. "Voting Behavior in Union Representation Elections: The Influence of Skill Homogeneity and Skill Group Size," ILR Review, Cornell University, ILR School, vol. 47(1), pages 99-113, October.
- Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpla:9402002. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)
If references are entirely missing, you can add them using this form.