Dynamic Incentive Effects of Team Formation: Experimental Evidence

Arbeitspapier

Optimal team composition has been the focus of exhaustive analysis, academic and otherwise. Yet, much of this analysis has ignored possible dynamic effects: e.g., anticipating that team formation is based on prior performance will affect prior performance. We test this hypothesis in a lab experiment with two stages of a real effort task. Participants first work individually without monetary incentives and are then assigned to teams of two where compensation is based on team performance. Our results are consistent with a simple investment-cum-matching model: pairing the worst performing individuals with the best yields 20% lower first stage effort than random matching. Pairing the best with the best, however, yields 5% higher first stage effort than random matching. In line with the theory the latter result is more pronounced when the task has less scope for learning-by-doing. Moreover, pairing the best with the best achieves the same effort response as having explicit monetary incentives in the first stage.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 10393

Classification and Topics

• Classification: Wirtschaft ; Bargaining Theory; Matching Theory ; Design of Experiments: Laboratory, Individual ; Personnel Economics: Labor Management
• Subject: matching ; team formation ; performance ; dynamic incentives

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gall, Thomas ; Hu, Xiaocheng ; Vlassopoulos, Michael
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/161016
• Last update: 10.03.2025, 11:41 AM CET