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Group incentives or individual incentives? A real-effort weak-link experiment

Author

Listed:
  • Bortolotti, Stefania
  • Devetag, Giovanna
  • Ortmann, Andreas
Abstract
Motivated by previous research on coordination problems and incentive design in organizations, we compare group incentives and individual incentives in a new experimental test-bed: a real-effort task embedding a weak-link technology. Comparing group-incentive and individual-incentive treatments, we find that the observed dynamics of both individual errors and worst performances within firms, after a phase of learning, are largely indistinguishable. Importantly, and possibly explaining our finding, more than 80% of our laboratory firms, notwithstanding initially widespread inefficiency, were eventually able to achieve and sustain efficient coordination despite the presence of an unforgiving payoff structure. This result, which may be due to the reduced strategic uncertainty so characteristic of chosen-effort weak-link game experiments, stands in stark contrast to standard results in the coordination game literature and provides an interesting challenge to test-beds currently used.

Suggested Citation

  • Bortolotti, Stefania & Devetag, Giovanna & Ortmann, Andreas, 2016. "Group incentives or individual incentives? A real-effort weak-link experiment," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 60-73.
    • Handle: RePEc:eee:joepsy:v:56:y:2016:i:c:p:60-73
    DOI: 10.1016/j.joep.2016.05.004
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    5. Jirjahn, Uwe & Mohrenweiser, Jens, 2023. "Variable Payment Schemes and Productivity: Do Individual-Based Schemes Really Have a Stronger Influence than Collective Ones?," IZA Discussion Papers 16267, Institute of Labor Economics (IZA).
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    7. Dutcher, Glenn & Saral, Krista, 2022. "Remote Work and Team Productivity," MPRA Paper 115253, University Library of Munich, Germany.

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    More about this item

    Keywords

    Group incentives; Individual incentives; Coordination; Experiments;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Juego de coordinación in Wikipedia Spanish
    2. Coordination game in Wikipedia English
    3. Jeu de coordination in Wikipedia French

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