Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87395
Authors: 
Hernandez, Pablo
Minor, Dylan B.
Sisak, Dana
Year of Publication: 
2013
Series/Report no.: 
Tinbergen Institute Discussion Paper 13-176/VII
Abstract: 
Under relative performance pay, other-regarding workers internalize the negative externality they impose on other workers. In one form -increased own effort reduces others' payoffs- this results in other-regarding individuals depressing efforts. In another form punishment reduces the payoff of other workers- groups with other-regarding individuals feature higher efforts because it is more difficult for these individuals to sustain low-effort (collusive) outcomes. We explore these effects experimentally and 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 social preferences composition of a team of workers has nuanced consequences on efforts.
Subjects: 
Social Preferences
Relative Performance
Collusion
Leadership
JEL: 
D03
M50
J30
Document Type: 
Working Paper

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