NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Letting Down the Team? Evidence of Social Effects of Team Incentives

Philip Babcock, Kelly Bedard, Gary Charness, John Hartman, Heather Royer

NBER Working Paper No. 16687
Issued in January 2011
NBER Program(s):   HC   HE

This paper estimates social effects of incentivizing people in teams. In two field experiments featuring exogenous team formation and opportunities for repeated social interactions, we find large team effects that operate through social channels. The team compensation system induced agents to choose effort as if they valued a marginal dollar of compensation for their teammate from two-thirds as much (in one study) to twice as much as they valued a dollar of their own compensation (in the other study). We conclude that social effects of monetary team incentives exist and can induce effort at lower cost than through direct individual payment.

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This paper was revised on June 28, 2012

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Document Object Identifier (DOI): 10.3386/w16687

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