Risk-sorting and preference for team piece rates

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. Abstract Incentive schemes not only influence the effort provision of workers, but might also induce sorting. As drivers of self-selection, the literature mainly focuses on measures of productivity; however, other variables, such as preferences, beliefs and personality, also play a role. With this paper, we contribute to the literature on drivers of self-selection by analyzing the role of perceived wage risks as potential influences on the sorting decision. To this end, we study a sorting decision between two variable compensation systems, where both options carry wage risks. Specifically, we look at sorting between individual piece rates and team piece rates. Terms of use: Documents inUsing experimental data, we find evidence for both risk diversification considerations and free-riding concerns (i.e., risk of teaming-up with low-productive teammates) as drivers of self-selection. However, our data does not support the concern of our experimental subjects that others actually reduce their effort when working under team compensation, as compared to individual-based compensation.

Who is attracted by teamwork? Evidence of multidimensional sorting from a real-effort experiment

“…Apart from these measures of task-specific and teamwork skills, we controlled for risk attitude (see Bäker and Mertins, 2013), gender (see Boschini and Sjögren, 2007; Dargnies, 2012; Kuhn and Villeval, 2015), and age. Furthermore, we controlled for whether participants were native speakers or not as language barriers might have kept participants from choosing teamwork.…”

“…Ishida, 2009). Further, lower measurement costs (no individual performance data are needed) may speak in favour of using team-based incentives (independent of how work is actually organized), and team-based compensation might reduce wage risks (Bäker and Mertins, 2013). Even in cases where none of the above reasoning would seem to hold (see Wageman, 1995), firms might still install teams thinking that their employees prefer to work on teams (e.g.…”

“…Further, we included a person’s expectations concerning the task-specific abilities and teamwork skills of potential teammates – thus following Corgnet (2010) who argued that information about potential teammate abilities will typically affect team formation (see also our discussion on the results of the Hamilton et al, 2003 study in the sub-section on multivariate estimation later). Moreover, we included other individual sorting characteristics that have been discussed in the literature: gender (Boschini and Sjögren, 2007; Dargnies, 2012; Kuhn and Villeval, 2015), sociability as measured by the personality trait of extraversion (Krueger and Schkade, 2008; Kuhn, 2009) and risk (Bäker and Mertins, 2013).…”

“… 4. A further downside might be – and we are grateful to one of our referees for pointing this out – that solving the knowledge and the maths tasks might be perceived as being associated with different risks, with the knowledge tasks potentially being perceived as the riskier one. However, if we assume that individuals perceive a greater risk with respect to their ability to solve the knowledge tasks rather than the maths tasks, Bäker and Mertins (2013) show that this has countervailing effects on the attractiveness of teamwork (as opposed to individual work). On the one hand, perceived risk of the team option might be higher for the knowledge task than for the maths task because potential teammate ability is also perceived to be more variable, that is, risky.…”

Do Overconfident Workers Cooperate Less? The Relationship Between Overconfidence and Cooperation in Team Production

“… With the exception of Cooper and Saral () and van Dijk et al () who use a similar framework, virtually, all economic experiments on team production compare incentive or selection effects between team‐based and individual‐based compensation schemes (e.g., Vandegrift and Yavas, ; Bäker and Mertins, ).…”