Team Incentives: Evidence from a Firm Level Experiment

By O. Bandiera, I. Barankay, Imran Rasul. Social Science Research Network, 2013

327 citations recorded by the source corpus.

Many organizations rely on teamwork, and yet field evidence on the impacts of team-based incentives remains scarce. Compared to individual incentives, team incentives can affect productivity by changing both workers’ effort and team composition. We present evidence from a field experiment designed to evaluate the impact of rank incentives and tournaments on the productivity and composition of teams. Strengthening incentives, either through rankings or tournaments, makes workers more likely to form teams with others of similar ability instead of with their friends. Introducing rank incentives however reduces average productivity by 14%, whereas introducing a tournament increases it by 24%. Both effects are heterogeneous: rank incentives only reduce the productivity of teams at the bottom of the productivity distribution, and monetary prize tournaments only increase the productivity of teams at the top. We interpret these results through a theoretical framework that makes precise when the provision of team-based incentives crowds out the productivity-enhancing effect of social connections under team production.

Subfields: Management Science and Operations Research, Safety Research, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/215e980ba476c7155ad169735bc5bd55868cff2a

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Citations in the corpus

Rankings and Risk-Taking in the Finance Industry (2018, unknown): “Recent evidence from laboratory and field experiments documents that rank incentives, on average, increase individuals’ effort and performance (Azmat and Iriberri, 2010; Blanes-i-Vidal and Nossol, 2011; Tran and Zeckhauser, 2012; Bandiera et al., 2013; Delfgaauw et al., 2013), but also promote uneth”
A survey of experimental research on contests, all-pay auctions and tournaments (2014, methodology): “Bartling et al. (2009) use a real-effort experiment to study how subjects’ distributional preferences influence their decisions to enter a tournament or a piece-rate incentive scheme.”
Awards Unbundled: Evidence from a Natural Field Experiment (2014, background): “Tran and Zeckhauser (2012), Azmat and Iriberri (2010), and Dur et al. (2013) show positive effects of rank information on performance, while Bandiera et al. (2013) and Barankay (2012) find that this information reduces productivity.”
Team Incentives and Performance: Evidence from a Retail Chain (2015, unknown): “Hamilton et al. (2003) and Bandiera et al. (2013) have documented the substantial empirical relevance of sorting.”
Do-gooders and go-getters: career incentives, selection, and performance in public service delivery (2014, background): “6The finding that material incentives, via career benefits, attract more qualified applicants echoes findings that pay-for-performance attracts more productive and more skilled employees in the private sector (Bandiera et al., 2013; Lazear, 2000).”
Why the Referential Treatment? Evidence from Field Experiments on Referrals (2016, background): “Theymay have received a social benefit or felt a warm glow from helping a friend find employment (e.g., Beaman, Keleher, and Magruder 2013).”
What Motivates Effort?: Evidence and Expert Forecasts (2018, unknown): “Conditions (8) and (9) lead to the same solution for  = 1 but with   1 (loss aversion) effort is higher in the loss treatment.”