Incentive Design and Trust: Comparing the Effects of Tournament and Team-Based Incentives on Trust

Robert Oxoby and Colette Friedrich ()
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Colette Friedrich: MIT

No 3424, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We explore the extent to which the structure of incentives affects trust. We hypothesize that the degree to which different incentive mechanisms emphasize competition (via the perceived intentions of others) and entitlements (via the perceived property rights) will affect individuals’ subsequent behavior. In our experiment, bargaining pairs earned endowments through either tournaments or team-based incentives. Participants engaged in a subsequent trust game in which the sender had access to the total endowment generated by the pair. We find that the structure of the incentive mechanisms has asymmetric effects on observed trust in which participants’ relative performance framed trusting behavior.

Keywords: trust; incentives; experiments; tournaments (search for similar items in EconPapers)
JEL-codes: C92 D63 J31 J33 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2008-03
New Economics Papers: this item is included in nep-cbe, nep-cta, nep-exp and nep-soc
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Citations: View citations in EconPapers (2)

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