Profit Sharing and Peer Reporting

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Profit Sharing and Peer ReportingIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. ABSTRACT Profit Sharing and Peer ReportingDespite the "1/N problem" associated with profit sharing, the empirical literature finds that sharing profits with workers has a positive impact on work team and firm performance. We examine one possible resolution to this puzzle by observing that, although the incentive to work harder under profit sharing is weak, it might be sufficient to motivate workers to report each other for shirking, especially if the workers are reciprocally-minded. Our model provides the rationale for this conjecture and we discuss the results of an experiment that confirms that profit sharing is most effective when peer reporting is possible.

Team Incentives, Social Cohesion, and Performance: A Natural Field Experiment

“…Their 'anti-shirking index' measures the willingness to undertake action upon observing a shirking colleague, using 4 questions. 19 For co-worker helping, we use 2 out of 5 questions from the scale for interpersonal helping developed by Moorman and Blakely (1995), who used this scale as one dimension in their measurement of organizational citizenship behavior. Lastly, we include three questions that measure individuals'job satisfaction, job search, and intention to quit.…”

“…In theory, this could go either way. Team incentives may induce team members to apply (more) peer pressure, to coerce their co-workers into exerting higher e¤ort (Kandel and Lazear 1992, Barron and Gjerde 1997, Freeman et al 2010, Carpenter et al 2018). Even if peer pressure is e¤ective in raising team performance, social cohesion may su¤er, in particular when peer pressure works through engendering feelings of shame and guilt.…”

Motivating Whistleblowers

“…One of the …rst whistleblowers experiments is by Reuben and Stephenson (2013), who examine individuals' willingness to report team members after observing them cheat while knowing that blowing the whistle would cause the whole group to be penalized. More recently, Carpenter et al (2017) experimentally investigate peer reporting within a …rm and …nd that sharing pro…ts with employees may e¤ectively incentivize individuals to blow the whistle against shirking co-workers. Bartuli et al (2016) study whistleblowing in an experimental context that is closer to ours, i.e.…”

Can whistleblower programs reduce tax evasion? Experimental evidence

“…10 In this current paper, we attempt to contribute to the existing literature on tax evasion by experimentally investigating the effectiveness of whistleblower programs. 11 While some experiments have been conducted to test the effectiveness of whistleblower programs in different contexts such as illegal cartel formation (Apesteguia et al, 2007;Bigoni et al, 2012) 12 , employee-employer relationships (Carpenter et al, 2017;Bartuli et al, 2016) 13 , cheating or lying games (Reuben and Stephenson, 2013;Schmolke and Utikal, 2016;10 According to the daily newspaper Kathimerini, the number of tax informers is booming in Greece, with a fourfold increase in reports of suspected fraud to the financial police in 2010 amid the serious economic crisis. The anti-fraud brigade, the SDOE, received 18 500 reports in 2010, as against 4,500 the previous year and 4000 in 2008.…”

“…The authors find that employees who are more altruistic and more aware of ethical issues are more likely to report wrongdoing. Carpenter et al (2017) experimentally investigate peer reporting in the context of a firm with sharing profits. The authors find that profit sharing motivates workers, who are better informed about their co-workers' behavior, to enforce higher effort by the mean of peer reporting shirkers.…”