Centralized vs. Decentralized Incentives in Teams: Experimental Evidence

Marc Lebourges and David Masclet ()
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Marc Lebourges: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique
David Masclet: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper presents evidence from a laboratory experiment comparing different incentive mechanisms for team work: centralized (target-based and team tournament) and decentralized (peer-pressure), or revenue sharing, which constitutes our baseline treatment. We observe free-riding in the baseline treatment, albeit not as severe as theoretically-predicted. Peer pressure partly limits free-riding but is costly for workers. Target-based schemes lead to near-Pareto levels of effort and high firms' profits but provide relatively lower workers' payoffs. Finally, team tournaments generate high efforts but also high payoff inequalities among workers. Mots cles : travail d'equipe, incitations collectives, tournois, pression par les pairs, experimentation

Keywords: teamwork; group incentives; tournaments; peer pressure; experiments (search for similar items in EconPapers)
Date: 2024
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Published in Revue Economique, 2024, 75 (5), pp.975-1042. ⟨10.3917/reco.755.0975⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04985012

DOI: 10.3917/reco.755.0975

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