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Does Team-Based Compensation Give Rise to Problems When Agents Vary in Their Ability?

Year: 2003

Type: article

Abstract: This paper reports the results of an experiment on how team heterogeneity in terms of productivity influences both the revenue sharing proposed by the principal to the team and the employees’ performance. Experimental evidence shows that when the team is heterogeneous, the principal does not try to motivate the agents through her sharing offer. Regardless of the level of team-based compensation, a large amount of free riding occurs since each agent is mainly influenced by his teammate's behavior. In contrast, when the team is homogeneous, agents are better able to cooperate, reciprocating the principal's offer.

Source: Experimental Economics

DOI: 10.1023/a:1026221318302

Authors: Claude Meidinger, Jean-Louis Rullière, Marie-Claire Villeval

Institutions: Centre National de la Recherche Scientifique, Université Paris 1 Panthéon-Sorbonne, Université Lumière Lyon 2, Groupe d'Analyse et de Théorie Economique Lyon St Etienne

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

Open Access status: green

Funders: Université de Lyon, Core Research for Evolutional Science and Technology

OpenAlex ID: W1525363502