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Incentivizing interdependent tasks: Evidence from a real-effort experiment

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  • Goette, Lorenz
  • Senn, Julien

Abstract

Workers are often required to jointly work on interdependent tasks that are cognitively complex. Yet, relatively little empirical evidence exists on how to effectively incentivize the workforce in such settings. Using a novel real-effort experiment, we assess the effects of team-based incentives (TBI) and individual-based incentives (IBI) on productivity. We provide evidence that TBI yield higher productivity than IBI, both when holding the incentives for the worker constant, and when holding the marginal cost of output for the firm constant. Various measures point towards workers engaging in lower quality work under IBI. We also provide new evidence that performance does not necessarily increase with the size of the monetary rewards. Overall, these results underscore the benefits of incentivizing the workforce in teams in settings in which workers’ payoff are interdependent and tasks are complex.

Suggested Citation

  • Goette, Lorenz & Senn, Julien, 2024. "Incentivizing interdependent tasks: Evidence from a real-effort experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 227(C).
    • Handle: RePEc:eee:jeborg:v:227:y:2024:i:c:s0167268124003329
    DOI: 10.1016/j.jebo.2024.106718
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    More about this item

    Keywords

    Incentives; Productivity; Piece rate; Team reward;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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