This study reports experiments that examine behavior under team production and a piece rate. In the experiments, participants complete a forecasting task and are rewarded based on the accuracy of their forecasts. In the piece-rate condition, participants are paid based on their own performance, whereas the team-production condition rewards participants based on the average performance of the team. Overall, there is no statistically significant difference in performance between the conditions. However, this result masks important differences in the behavior of men and women across the conditions. Men in the team-production condition increase their performance relative to men in the piece-rate condition. However, this gap in male performances across conditions diminishes over the course of the experiment. In contrast, women in the team-production condition show significantly lower performance than the women in the piece rate. As a consequence of these differences, men in the team-production condition show significantly better performance than women in the team-production condition. We also find evidence that men show stronger performance when they are in teams with a larger variation in skill level. Copyright r 2010 John Wiley & Sons, Ltd.
INTRODUCTIONUnder team production, groups rather than individuals are responsible for a set of tasks and compensation is based on the performance of the group. Because compensation is based on group performance, theoretical models of team production suggest that team members will free ride on the efforts of others (i.e. shirk). If total returns are divided evenly among a team with n members, team members incur the full cost of their effort while they receive only 1/n of the marginal gains from the effort. Consequently, effort levels are sub-optimal. Although theoretical models suggest that team production may lower worker productivity, firms often opt to reward workers based on team performance anyway. For instance, a recent survey finds that 26% of firms used team rewards (McClurg, 2001).To further advance understanding of behavior under team production, we conduct a series of experiments. We compare behavior under team production and a piece-rate payment scheme and examine the likely causes of the mixed results on shirking in team production. In the experiments, participants complete a real-effort forecasting task and are rewarded based on the accuracy of their forecasts. The experimental task is designed to allow measurement of both individual contributions and team performance.1 Participants were randomly assigned to one of two conditions. In the piece-rate condition, participants are paid based on their own performance, whereas the team-production condition rewards participants based on the average performance of the team. In each condition, participants produce forecasts for twenty rounds. In each round, participants receive feedback on their forecast error and earnings. In the team-production condition, participants also receive information on the forecast error of the tea...