LETTING DOWN THE TEAM? SOCIAL EFFECTS OF TEAM INCENTIVES

Philip Babcock · Kelly Bedard · Gary B. Charness · John Hartman · Heather Royer

133 citations0/0 files storedJournal of the European Economic Association

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Experimental Behavioral Economics Studies Decision-Making and Behavioral Economics Game Theory and Voting Systems

Abstract

This paper estimates social effects of incentivizing people in teams. In three field experiments featuring exogenous team formation and opportunities for repeated social interactions, we find large team effects that operate through social channels. In particular, assignment to a team treatment increases productivity by 9%–17% relative to an individual incentive treatment, even though the individual incentive yields a higher private return. Further, we find that in a choice treatment individuals overwhelmingly prefer the individual incentive to the team incentive, despite the latter being more effective. These results are most consistent with the team effects operating through guilt or social pressure as opposed to pure altruism.

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References

1999A Theory of Fairness, Competition, and Cooperation 1997Golden Eggs and Hyperbolic Discounting 2000ERC: A Theory of Equity, Reciprocity, and Competition 1982Moral Hazard in Teams 2002Understanding Social Preferences with Simple Tests 2006Incentives and Prosocial Behavior 1999Doing It Now or Later 1961EFFECTS OF GROUP PRESSURE UPON THE MODIFICATION AND DISTORTION OF JUDGMENTS

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