Productivity under Group Incentives

An Experimental Study

Haig R. Nalbantian, Andrew Schotter

    Research output: Contribution to journalArticle

    Abstract

    This paper presents an experimental examination of a variety of group incentive programs. We investigate simple revenue sharing and more sophisticated, target-based systems such as profit sharing or productivity gainsharing, as well as tournament-based and monitoring schemes. Our results can be characterized by three facts: (1) history matters; how a group performs in one incentive scheme depends on its history together under the scheme that preceded it; (2) relative performance schemes outperform target-based schemes; and (3) monitoring can elicit high effort from workers, but the probability of monitoring must be high and, therefore, costly.

    Original languageEnglish (US)
    Pages (from-to)314-341
    Number of pages28
    JournalAmerican Economic Review
    Volume87
    Issue number3
    StatePublished - Jun 1997

    Fingerprint

    Experimental study
    Productivity
    Monitoring
    Group incentives
    Profit sharing
    Incentive schemes
    Relative performance
    Tournament
    Workers
    Revenue sharing

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Nalbantian, H. R., & Schotter, A. (1997). Productivity under Group Incentives: An Experimental Study. American Economic Review, 87(3), 314-341.

    Productivity under Group Incentives : An Experimental Study. / Nalbantian, Haig R.; Schotter, Andrew.

    In: American Economic Review, Vol. 87, No. 3, 06.1997, p. 314-341.

    Research output: Contribution to journalArticle

    Nalbantian, HR & Schotter, A 1997, 'Productivity under Group Incentives: An Experimental Study', American Economic Review, vol. 87, no. 3, pp. 314-341.
    Nalbantian, Haig R. ; Schotter, Andrew. / Productivity under Group Incentives : An Experimental Study. In: American Economic Review. 1997 ; Vol. 87, No. 3. pp. 314-341.
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