What Kind of Reward Scheme Works Best to Induce High Effort in Teams?

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The experiment presented in this video explores the interaction of reward schemes and production functions on team effort. SEBASTIAN J. GOERG explains that unequal rewards seem to yield higher efficiency for complementary production functions (i.e., if each worker’s effort counts); but that symmetric reward schemes induce higher efforts if workers’ efforts are substitutes. He concludes that inequality may have a positive effect on efficiency and that both production function and reward scheme are potent tools to raise average effort.

DOI:

https://doi.org/10.21036/LTPUB10096

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Researcher

Sebastian J. Goerg is Assistant Professor in Economics at Florida State University. Between 2009 and 2012, Goerg was Senior Research Fellow at the Max Planck Institute for Research on Collective Goods, in Bonn (Germany).

In his research Goerg focuses on the economics of rewards, incentives and (legal) institutions, and how they affect human behaviour. In the field of production effort, Goerg sees a potential in unequal reward systems.

Institution

Florida State University

"Florida State University preserves, expands, and disseminates knowledge in the sciences, technology, arts, humanities, and professions, while embracing a philosophy of learning strongly rooted in the traditions of the liberal arts. The university is dedicated to excellence in teaching, research, creative endeavors, and service. The university strives to instill the strength, skill, and character essential for lifelong learning, personal responsibility, and sustained achievement within a community that fosters free inquiry and embraces diversity." ( Source )

Original publication

Treating Equals Unequally: Incentives in Teams, Workers’ Motivation, and Production Technology

Kube Sebastian, Goerg Sebastian J. and Zultan Ro’i

Journal of Labor Economics

Published in 2010

Reading recommendations

Can Higher Rewards Lead to Less Effort? Incentive Reversal in Teams

Kube Sebastian, others, Winter Eyal and Klor Esteban F.

Journal of Economic Behavior & Organization

Published in 2014

Equity and Efficiency in Multi-Worker Firms: Insights from Experimental Economics

Kube Sebastian, Goerg Sebastian J., Abeler Johannes, Altmann Steffen and Wibral Matthias

Analyse & Kritik

Published in 2011

Interactions Between Workers and the Technology of Production: Evidence from Professional Baseball

Winter Eyal and Gould Eric D.

The Review of Economics and Statistics

Published in 2009

Incentives and Discrimination

Winter Eyal

American Economic Review

Published in 2004

A Theory of Fairness, Competition, and Cooperation

Fehr Ernst and Schmidt Klaus M.

Quarterly Journal of Economics

Published in 1999

Show more

Beyond

A Ground-breaking Scientific Revolution

An Alarming Challenge for Society

If I Had a Second Life

A Personal Reading Recommendation

Citation

Sebastian J. Goerg, Latest Thinking, What Kind of Reward Scheme Works Best to Induce High Effort in Teams?, https://doi.org/10.21036/LTPUB10096, 2010

Credits:

© Sebastian J. Goerg and Latest Thinking
This work is licensed under CC-BY 4.0