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Do People Who Care About Others Cooperate More? Experimental Evidence from Relative Incentive Pay

44 Pages Posted: 6 Oct 2015  

Pablo Hernandez-Lagos

New York University, Abu Dhabi

Dylan Minor

Northwestern University - Kellogg School of Management

Dana Sisak

Erasmus University Rotterdam (EUR) - Department of Economics; Tinbergen Institute

Date Written: September 2015

Abstract

We experimentally study ways in which the social preferences of individuals and groups affect performance when faced with relative incentives. We also identify the mediating role that communication and leadership play in generating these effects. We find other-regarding workers tend to depress efforts by 15% on average. However, selfish workers are nearly three times more likely to lead workers to coordinate on minimal efforts when communication is possible. Hence, the other-regarding composition of a team of workers has complex consequences for organizational performance.

Keywords: Social Preferences, Relative Performance, Collusion, Leadership

Suggested Citation

Hernandez-Lagos, Pablo and Minor, Dylan and Sisak, Dana, Do People Who Care About Others Cooperate More? Experimental Evidence from Relative Incentive Pay (September 2015). Harvard Business School Strategy Unit Working Paper No. 16-040. Available at SSRN: https://ssrn.com/abstract=2669665 or http://dx.doi.org/10.2139/ssrn.2669665

Pablo Hernandez-Lagos

New York University, Abu Dhabi ( email )

PO Box 903
NYC, NY 10276-0903
United States

HOME PAGE: http://pablohernandez-lagos.com

Dylan Minor (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Dana Sisak

Erasmus University Rotterdam (EUR) - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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