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Hierarchy and Opportunism in Teams

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Listed:
  • Potters, J.J.M.

    (Tilburg University, Center For Economic Research)

  • Sefton, M.
  • van der Heijden, E.C.M.

    (Tilburg University, Center For Economic Research)

Abstract

We use an experiment to compare two institutions for allocating the proceeds of team production. Under revenue-sharing, each team member receives an equal share of team output; under leader-determined shares, a team leader has the power to implement her own allocation. Both arrangements are vulnerable to opportunistic incentives: under revenue-sharing team members have an incentive to free ride, while under leader-determined shares leaders have an incentive to seize team output. We find that most leaders forego the temptation to appropriate team output and manage to curtail free riding. As a result, compared to revenue-sharing, the presence of a team leader results in a significant improvement in team performance.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Potters, J.J.M. & Sefton, M. & van der Heijden, E.C.M., 2005. "Hierarchy and Opportunism in Teams," Discussion Paper 2005-109, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:125977a1-99f8-41ae-8af4-e8420bc3d2dd
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    References listed on IDEAS

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    More about this item

    Keywords

    team production; leadership; opportunism; experiments;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D2 - Microeconomics - - Production and Organizations
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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