Profit Sharing and Peer Reporting

Jeffrey Carpenter, Andrea Robbett and Prottoy Akbar

No 9946, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Despite the "1/N problem" associated with profit sharing, the empirical literature finds that sharing profits with workers has a positive impact on work team and firm performance. We examine one possible resolution to this puzzle by observing that, although the incentive to work harder under profit sharing is weak, it might be sufficient to motivate workers to report each other for shirking, especially if the workers are reciprocally-minded. Our model provides the rationale for this conjecture and we discuss the results of an experiment that confirms that profit sharing is most effective when peer reporting is possible.

Keywords: team production; profit sharing; peer reporting; reciprocity; experiment (search for similar items in EconPapers)
JEL-codes: C92 D20 J30 M52 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2016-05
New Economics Papers: this item is included in nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Profit Sharing and Peer Reporting (2018)
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