This research studies how incentives to cooperation and sustainability through up-front pay mechanisms can impact teamwork. For this purpose, we carry out certain laboratory experiments on the two-player Minimum Effort Game. First, we compare two treatments: one with "free play teams", against teams forced to make a non-refundable up-front payment that covers the total output in case of maximum contribution, which we call "optimal entry cost teams". In the second comparison, experimental results are focused on different amounts in the up-front pay in order to test the theoretical prediction that higher entry costs might improve efficiency (optimal entry cost treatment vs. medium entry cost treatment). We find that the up-front pay mechanism induces higher effort levels compared to the "free play teams", which converge to the efficient and sustainable solution. The increase in the up-front pay, however, does not seem to accelerate such a convergence. These findings provide evidence for a new mechanism to encourage efficiency and sustainability in firms.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.