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Centralized vs. Decentralized Incentives in Teams: Experimental Evidence

Author

Listed:
  • Marc Lebourges

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • David Masclet

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper presents evidence from a laboratory experiment comparing different incentive mechanisms for team work: centralized (target-based and team tournament) and decentralized (peer-pressure), or revenue sharing, which constitutes our baseline treatment. We observe free-riding in the baseline treatment, albeit not as severe as theoretically-predicted. Peer pressure partly limits free-riding but is costly for workers. Target-based schemes lead to near-Pareto levels of effort and high firms' profits but provide relatively lower workers' payoffs. Finally, team tournaments generate high efforts but also high payoff inequalities among workers. Mots cles : travail d'equipe, incitations collectives, tournois, pression par les pairs, experimentation

Suggested Citation

  • Marc Lebourges & David Masclet, 2024. "Centralized vs. Decentralized Incentives in Teams: Experimental Evidence," Post-Print hal-04985012, HAL.
    • Handle: RePEc:hal:journl:hal-04985012
    DOI: 10.3917/reco.755.0975
    as

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