Hierarchy and opportunism in teams

Research output: Contribution to journalArticleScientificpeer-review

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.
Original languageEnglish
Pages (from-to)39-50
JournalJournal of Economic Behavior and Organization
Volume69
Issue number1
Publication statusPublished - 2009

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Opportunism
Revenue sharing
Incentives
Team leaders
Temptation
Experiment
Free-riding
Team production
Team performance

Cite this

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title = "Hierarchy and opportunism in teams",
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.",
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Hierarchy and opportunism in teams. / van der Heijden, E.C.M.; Potters, J.J.M.; Sefton, M.

In: Journal of Economic Behavior and Organization, Vol. 69, No. 1, 2009, p. 39-50.

Research output: Contribution to journalArticleScientificpeer-review

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T1 - Hierarchy and opportunism in teams

AU - van der Heijden, E.C.M.

AU - Potters, J.J.M.

AU - Sefton, M.

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N2 - 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.

AB - 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.

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JO - Journal of Economic Behavior & Organization

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