Does Team-Based Compensation Give Rise to Problems when Agents Vary in their Ability ?

Claude Meidinger (), Jean-Louis Rullière () and Marie Claire Villeval
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Claude Meidinger: TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
Jean-Louis Rullière: GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper reports the results of an experiment on how team composition influences both the contract offer of employers and employee performance when a revenue-sharing scheme is introduced. Experimental evidence shows that the principal ceases trying to monitor her team through a contract offer when agents vary in their ability. In this case, agents focus more heavily on their teammate's behaviour than on the principal's offer and therefore, regardless of the level of team-based compensation, a large amount of free-riding occurs within the team. In contrast, when the team is homogeneous, agents are better able to use the contract offer as a coordination device among themselves and therefore achieve higher efficiency.

Keywords: compensation; experimental economics; free-riding; peer pressure; teamwork; économie expérimentale; passager clandestin; pression des pairs; travail en équipe (search for similar items in EconPapers)
Date: 2001
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00179979
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Published in 2001

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Related works:
Journal Article: Does Team-Based Compensation Give Rise to Problems When Agents Vary in Their Ability? (2003)
Working Paper: Does Team-Based Compensation Give Rise to Problems when Agents Vary in their Ability? (2003)
Working Paper: Does Team-Based Compensation Give Rise to Problems when Agents Vary in their Ability? (2003)
Working Paper: Does Team-Based Compensation Give Rise to Problems when Agents Vary in their Ability ? (2001)
Working Paper: Does Team-Based Compensation Give Rise to Problems when Agents Vary in their Ability? (2001)
Working Paper: Does Team-Based Compensation Give Rise to Problems when Agents Vary in their Ability? (2001)
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