Using Social Connections and Financial Incentives to Solve Coordination Failure: A Quasi-Field Experiment in India's Manufactur

Amrita Dhillon, Farzana Afridi, Sherry Xin Li and Swati Sharma

No 14356, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Production processes are often organized in teams, yet there is limited evidence on whether and how social connections and financial incentives affect productivity in tasks that require coordination among workers. We simulate assembly line production in a lab-in-the-field experiment in which workers exert real effort in a minimum-effort game in teams whose members are either socially connected or unconnected and are paid according to the group output. We find that group output increases by 18%, and coordination improves by 30-39% when workers are socially connected with their co-workers. These findings can plausibly be explained by the higher levels of pro-social motivation between co-workers in socially connected teams.

Keywords: Caste-based networks; Social incentives; Financial incentives; Minimum effort game; Output; Coordination (search for similar items in EconPapers)
JEL-codes: C93 D20 D22 D24 J33 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-exp, nep-hrm, nep-net and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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