An experimental test of behavior under team production

Abstract

This study reports experiments that examine behavior under team production and a piece rate. In the experiments, participants complete a forecasting task and are rewarded based on the accuracy of their forecasts. In the piece-rate condition, participants are paid based on their own performance, whereas the team-production condition rewards participants based on the average performance of the team. Overall, there is no statistically significant difference in performance between the conditions. However, this result masks important differences in the behavior of men and women across the conditions. Men in the team-production condition increase their performance relative to men in the piece-rate condition. However, this gap in male performances across conditions diminishes over the course of the experiment. In contrast, women in the team-production condition show significantly lower performance than the women in the piece rate. As a consequence of these differences, men in the team-production condition show significantly better performance than women in the team-production condition. We also find evidence that men show stronger performance when they are in teams with a larger variation in skill level. Copyright r 2010 John Wiley & Sons, Ltd. INTRODUCTIONUnder team production, groups rather than individuals are responsible for a set of tasks and compensation is based on the performance of the group. Because compensation is based on group performance, theoretical models of team production suggest that team members will free ride on the efforts of others (i.e. shirk). If total returns are divided evenly among a team with n members, team members incur the full cost of their effort while they receive only 1/n of the marginal gains from the effort. Consequently, effort levels are sub-optimal. Although theoretical models suggest that team production may lower worker productivity, firms often opt to reward workers based on team performance anyway. For instance, a recent survey finds that 26% of firms used team rewards (McClurg, 2001).To further advance understanding of behavior under team production, we conduct a series of experiments. We compare behavior under team production and a piece-rate payment scheme and examine the likely causes of the mixed results on shirking in team production. In the experiments, participants complete a real-effort forecasting task and are rewarded based on the accuracy of their forecasts. The experimental task is designed to allow measurement of both individual contributions and team performance.1 Participants were randomly assigned to one of two conditions. In the piece-rate condition, participants are paid based on their own performance, whereas the team-production condition rewards participants based on the average performance of the team. In each condition, participants produce forecasts for twenty rounds. In each round, participants receive feedback on their forecast error and earnings. In the team-production condition, participants also receive information on the forecast error of the tea...

Relative performance pay in the shadow of crisis

“…However, in contrast to our setting, public good games do not have uncertain payments. A random component in collective payment can typically be found in situations with team-based compensation where less shirking and higher effort levels than predicted are observed in experiments as well (van Dijk et al, 2001, Vandegrift andYavas, 2011). Our severetreatment indeed shows similarities with a team setting as both players had to be successful to avoid termination.…”

“…This situation reminds of a team problem as the workers have to stick together in order to avoid termination. The important difference to the existing team literature (see, e.g., van Dijk et al, 2001, or Vandegrift andYavas, 2011) is that the workers still participate in a tournament and therefore only one of them will be able to collect the winner prize. We show that in this setting efforts are strategic complements in the sense of Bulow et al (1985) as less effort by one of the workers induces less effort by the other.…”

Team Production with Punishment Option: Insights from a Real-Effort Experiment

“… As examples of ‘real effort’ experiments, see Falk and Fehr (), Brüggen and Strobel (), Vandegrift and Yavas (), Eriksson et al . (), Mohnen et al .…”

Do Overconfident Workers Cooperate Less? The Relationship Between Overconfidence and Cooperation in Team Production

“…However, individuals often do. This has been proved in field (Hamilton et al ., ) and laboratory studies (van Dijk et al ., ; Vandegrift and Yavas, ). The question arises whether people with certain characteristics are more inclined to cooperate than others.…”