Hierarchy and opportunism in teams
van der Heijden,E.C.M. Potters,J.J.M. Sefton,M.
van der Heijden,E.C.M.
Potters,J.J.M.
Sefton,M.
Abstract
We use an experiment to compare two institutions for allocating the proceeds of team production. Under revenue-sharing, each team member receives an equal share of team output; under leader-determined shares, a team leader has the power to implement her own allocation. Both arrangements are vulnerable to opportunistic incentives: under revenue-sharing team members have an incentive to free ride, while under leader-determined shares leaders have an incentive to seize team output. We find that most leaders forego the temptation to appropriate team output and manage to curtail free riding. As a result, compared to revenue-sharing, the presence of a team leader results in a significant improvement in team performance.
Description
Appeared earlier as CentER Dicussion paper 2005-109
Date
2009
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Research Projects
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Citation
van der Heijden, E C M, Potters, J J M & Sefton, M 2009, 'Hierarchy and opportunism in teams', Journal of Economic Behavior and Organization, vol. 69, no. 1, pp. 39-50.