Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129811
Authors: 
Drouvelis, Michalis
Nosenzo, Daniele
Sefton, Martin
Year of Publication: 
2015
Series/Report no.: 
CeDEx Discussion Paper Series 2015-05
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.
Subjects: 
Team Production
Leadership
Reward Power
Delegation
Experiment
JEL: 
C92
H4
D7
Document Type: 
Working Paper

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