Productivity under Group Incentives: An Experimental Study

Haig R. Nalbantian, Andrew Schotter

    Research output: Contribution to journalArticle

    Abstract

    This paper presents an experimental examination of a variety of group incentive programs. We investigate simple revenue sharing and more sophisticated, target-based systems such as profit sharing or productivity gainsharing, as well as tournament-based and monitoring schemes. Our results can be characterized by three facts: (1) history matters; how a group performs in one incentive scheme depends on its history together under the scheme that preceded it; (2) relative performance schemes outperform target-based schemes; and (3) monitoring can elicit high effort from workers, but the probability of monitoring must be high and, therefore, costly.

    Original languageEnglish (US)
    Pages (from-to)314-341
    Number of pages28
    JournalAmerican Economic Review
    Volume87
    Issue number3
    StatePublished - Jun 1997

    ASJC Scopus subject areas

    • Economics and Econometrics

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  • Cite this

    Nalbantian, H. R., & Schotter, A. (1997). Productivity under Group Incentives: An Experimental Study. American Economic Review, 87(3), 314-341.