Abstract

http://ssrn.com/abstract=1988707
 
 

Citations (14)



 
 

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Team Incentives: Evidence from a Firm Level Experiment


Oriana Bandiera


London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Iwan Barankay


University of Pennsylvania - Management Department; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Imran Rasul


University College London - Department of Economics; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

January 2012

CEPR Discussion Paper No. DP8776

Abstract:     
Many organizations rely on teamwork, and yet field evidence on the impacts of team-based incentives remains scarce. Compared to individual incentives, team incentives can affect productivity by changing both workers’ effort and team composition. We present evidence from a field experiment designed to evaluate the impact of rank incentives and tournaments on the productivity and composition of teams. Strengthening incentives, either through rankings or tournaments, makes workers more likely to form teams with others of similar ability instead of with their friends. Introducing rank incentives however reduces average productivity by 14%, whereas introducing a tournament increases it by 24%. Both effects are heterogeneous: rank incentives only reduce the productivity of teams at the bottom of the productivity distribution, and monetary prize tournaments only increase the productivity of teams at the top. We interpret these results through a theoretical framework that makes precise when the provision of team-based incentives crowds out the productivity enhancing effect of social connections under team production.

Number of Pages in PDF File: 50

Keywords: rank incentives, team-based incentives, teams, tournaments

JEL Classification: D23, J33, M52

working papers series


Date posted: January 20, 2012  

Suggested Citation

Bandiera, Oriana and Barankay, Iwan and Rasul, Imran, Team Incentives: Evidence from a Firm Level Experiment (January 2012). CEPR Discussion Paper No. DP8776. Available at SSRN: http://ssrn.com/abstract=1988707

Contact Information

Oriana Bandiera (Contact Author)
London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) ( email )
Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7519 (Phone)
+44 20 7055 6951 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Iwan Barankay
University of Pennsylvania - Management Department ( email )
The Wharton School
Philadelphia, PA 19104-6370
United States

Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Imran Rasul
University College London - Department of Economics ( email )
Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 20 7679 5853 (Phone)
+44 20 7916 2775 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Feedback to SSRN


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Abstract Views: 630
Downloads: 39
Citations:  14
Footnotes:  24

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