Rac(g)e Against the Machine? Social Incentives When Humans Meet Robots

Because work is most often performed in a social context, social incentives are key to understand incentive setting in firms. We assess the strength of social incentives, which critically depend on the extent of social preferences and social pressure at work, by assessing the difference in human performance when people complete a sequential task with either other humans or robots. We find evidence that, despite maintaining monetary incentives intact, humans who work with robots underperform those who work with other humans, especially under team pay. The lack of altruism toward robots and the lack of social pressure exerted by robots are key to explain this negative effect under team pay. Under piece rate, the lack of envy toward robots plays a crucial role. Regardless of the payment scheme, our findings show that social incentives are powerful. Accounting for the weakening of social incentives when assessing the cost-efficiency of replacing humans with robots is thus critical.