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Competitive versus cooperative incentives in team production with heterogeneous agents

E. Dutcher, Regine Oexl (), Dmitry Ryvkin () and Tim Salmon ()

Working Papers from Faculty of Economics and Statistics, University of Innsbruck

Abstract: A debate among practicing managers is whether to use cooperative or competitive incentives for team production. While competitive incentives may drive individual effort higher, they may also lead to less help and more sabotage; an issue exacerbated when team members' abilities are varied. Using a lab experiment, we examine how increasing competitive incentives affects performance as team composition changes. We find that competitive incentives generally underperform noncompetitive incentives and a larger bonus does not generate enough effort to compensate for a loss in help. Our results help understand better how to balance out individual versus team rewards and how firms could structure teams when employees have heterogeneous abilities.

Keywords: contest; help and sabotage; team composition; incentive structure (search for similar items in EconPapers)
JEL-codes: C92 D01 (search for similar items in EconPapers)
Pages: 77
Date: 2021
New Economics Papers: this item is included in nep-cdm, nep-exp, nep-hrm, nep-isf and nep-lma
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