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Do People Who Care About Others Cooperate More? Experimental Evidence from Relative Incentive Pay

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  • Pablo Hernandez

    (New York University AD)

  • Dylan Minor

    (Harvard Business School, Strategy Unit)

  • Dana Sisak

    (Erasmus University Rotterdam)

Abstract

We experimentally study ways in which the social preferences of individuals and groups affect performance when faced with relative incentives. We also identify the mediating role that communication and leadership play in generating these effects. We find other-regarding workers tend to depress efforts by 15% on average. However, selfish workers are nearly three times more likely to lead workers to coordinate on minimal efforts when communication is possible. Hence, the other-regarding composition of a team of workers has complex consequences for organizational performance.

Suggested Citation

  • Pablo Hernandez & Dylan Minor & Dana Sisak, 2015. "Do People Who Care About Others Cooperate More? Experimental Evidence from Relative Incentive Pay," Harvard Business School Working Papers 16-040, Harvard Business School.
    • Handle: RePEc:hbs:wpaper:16-040
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    More about this item

    Keywords

    Social Preferences; Relative Performance; Collusion; Leadership;
    All these keywords.

    JEL classification:

    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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