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Relative rewards within team-based compensation

Irlenbusch, B.; Ruchala, G.K.; (2008) Relative rewards within team-based compensation. Labour Economics , 15 (2) pp. 141-167. 10.1016/j.labeco.2007.02.003.

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Abstract

How to design compensation schemes to motivate team members appears to be one of the most challenging problems in the economic analysis of labour provision. We shed light on this issue by experimentally investigating team-based compensations with and without bonuses awarded to the highest contributors in teams. A purely team-based compensation scheme induces agents to voluntarily cooperate while introducing an additional relative reward increases effort and efficiency only when the bonus is substantial. In this case, however, the data suggests that tournament competition crowds out voluntary cooperation within a team.

Type: Article
Title: Relative rewards within team-based compensation
DOI: 10.1016/j.labeco.2007.02.003
Publisher version: http://dx.doi.org/10.1016/j.labeco.2007.02.003
Language: English
Keywords: Teamwork, bonus pools, relative rewards, motivation crowding out, voluntary, cooperation, personnel economics, experiments
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/17453
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