Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142385
Authors: 
Carpenter, Jeffrey P.
Robbett, Andrea
Akbar, Prottoy
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 9946
Abstract: 
Despite the "1/N problem" associated with profit sharing, the empirical literature finds that sharing profits with workers has a positive impact on work team and firm performance. We examine one possible resolution to this puzzle by observing that, although the incentive to work harder under profit sharing is weak, it might be sufficient to motivate workers to report each other for shirking, especially if the workers are reciprocally-minded. Our model provides the rationale for this conjecture and we discuss the results of an experiment that confirms that profit sharing is most effective when peer reporting is possible.
Subjects: 
team production
profit sharing
peer reporting
reciprocity
experiment
JEL: 
C92
J30
D20
M52
Document Type: 
Working Paper

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