Team Incentives and Leadership

Michalis Drouvelis, Daniele Nosenzo and Martin Sefton ()
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Martin Sefton: Department of Economics, University of Nottingham.

No 2015-05, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: We study, experimentally, how two alternative incentive mechanisms affect team performance, and how a team chooses between alternative mechanisms. We study a group incentive mechanism, where team output is shared equally among team members, and a hierarchical mechanism team output is allocated by a team leader. Our experiment examines these mechanisms in both homogeneous teams, where workers have identical productivities and in heterogeneous teams, where workers vary in their productivity. Our results are robust to whether teams are homogeneous or heterogeneous. We find that output is higher when a leader has the power to allocate output, but this mechanism also generates large differences between earnings of leaders and other team members. When team members can choose how much of team output is to be shared equally and how much is to be allocated by a leader, they tend to restrict the leader’s power to distributing less than half of the pie.

Keywords: Team Production; Leadership; Reward Power; Delegation; Experiment (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-cdm, nep-cta, nep-exp, nep-hrm and nep-ppm
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Citations: View citations in EconPapers (1)

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Journal Article: Team incentives and leadership (2017)
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