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Self-Selection and the Power of Incentive Schemes: An Experimental Study

Jana Vyrastekova (), Sander Onderstal () and Pierre Koning ()

No 10-074/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper led to an article in Applied Economics (2012). Vol. 44(32), pages 4211-4219. We examine how self-selection of workers into firms depends on the power of the firms' incentive schemes and how it affects the performance of firms that increase the power of the incentive schemes. In a laboratory experiment, we let subjects choose between (low-powered) team incentives and (high-powered) individual incentives. We observe that subjects exhibiting high trust or reciprocity in the trust game are more likely to choose team incentives. When exposed to individual incentives, workers who chose team incentives perform worse if both the unobservable interdependency between workers and their incentive to cooperate under team incentives are high.

Keywords: Incentive scheme; Self-selection; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 J33 M52 (search for similar items in EconPapers)
Date: 2010-07-29
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Working Paper: Self-selection and the Power of Incentive Schemes: An Experimental Study (2011) Downloads
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