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

Author

Listed:
  • Jana Vyrastekova

    (Nijmegen School of Management - Radboud University [Nijmegen])

  • Sander Onderstal

    (UvA - University of Amsterdam [Amsterdam] = Universiteit van Amsterdam)

  • Pierre Koning

    (CPB Netherlands Bureau for Economic Policy Analysis - CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

We examine how self-selection of workers depends on the power of incentive schemes and how it affects team performance if the power of the incentive schemes is increased. 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, subjects who chose team incentives perform worse if both the unobservable interdependency between their effort and their incentive to cooperate under team incentives are high.

Suggested Citation

  • Jana Vyrastekova & Sander Onderstal & Pierre Koning, 2011. "Self-selection and the Power of Incentive Schemes: An Experimental Study," Post-Print hal-00716630, HAL.
    • Handle: RePEc:hal:journl:hal-00716630
    DOI: 10.1080/00036846.2011.587787
    Note: View the original document on HAL open archive server: https://hal.science/hal-00716630v1
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    Keywords

    Social Sciences & Humanities;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • 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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