Technology, team production and incentives

Vladimir Smirnov and Andrew Wait ()

No 2015-21, Working Papers from University of Sydney, School of Economics

Abstract: Incentive reversal (IR) is when higher rewards induce some agents to reduce their effort (Winter, 2009). We show that IR can hold for all agents when: there is an improvement in production technology; and rewards are based on team output. Whilst IR requires at least one worker's marginal return to be decreasing in team productivity when agents invest simultaneously, this is not necessary with sequential investments. Rather, IR can occur with sequential investment when the marginal return of effort for all agents is increasing with improvements in technology.

Keywords: Moral hazard in teams; Technology; Productivity; Incentive reversal (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-cta, nep-hrm, nep-ino and nep-mic
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Journal Article: Technology, team production and incentives (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:syd:wpaper:2015-21

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