Incentives for Helping on the Job: Theory and Evidence

Robert Drago and Gerald T. Garvey
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Robert Drago: University of Wisconsin-Milwaukee
Gerald T. Garvey: Australian National University

Labor and Demography from University Library of Munich, Germany

Abstract: Recent advances in incentive theory stress the multi- dimensional nature of agent effort and particularly the case where workers can improve the performance of others through `helping' efforts. This paper provides a simple model of an agent's incentive to help depending on the compensation package, the cost of monitoring, and the allocation of tasks. We then analyze the determinants of reported helping efforts within workgroups for a sample of Australian workers. As expected, workers are less likely to help one another when promotion incentives are strong. Subsidiary results are consistent with our `contest' interpretation of this finding and not consistent with `gift exchange' or other variants of the efficiency wage hypothesis. Also as predicted, a wide range of job tasks amplifies the negative effect of promotional incentives, while monitoring of help mitigates the negative effect. We find an unexpected positive effect of piece rates on helping effort for long-term employees which we show is consistent with repeated game effects between workers. These considerations do not overturn our findings about the effects of tournaments.(JEL J33)

JEL-codes: J (search for similar items in EconPapers)
Pages: 32 pages
Date: 1994-02-18, Revised 1994-03-29
Note: 32 pages text, 4 pages tables, WordPerfect 5.1 file. VVdecode then Unzip to read. Paper substantially revised, mainly to deal with possibility of efficiency wage effects and to incorporate simulations.
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Citations: View citations in EconPapers (1)

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