Do People Who Care About Others Cooperate More? Experimental Evidence from Relative Incentive Pay

by Dylan Minor, Pablo Hernandez & Dana Sisak

Overview — This paper explores how the degree to which individuals care about other workers affects their own performance when faced with relative performance pay.

Author Abstract

We experimentally study ways in which the social preferences of individuals and groups affect performance when faced with relative incentives. We also identify the mediating role that communication and leadership play in generating these effects. We find other-regarding workers tend to depress efforts by 15% on average. However, selfish workers are nearly three times more likely to lead workers to coordinate on minimal efforts when communication is possible. Hence, the other-regarding composition of a team of workers has complex consequences for organizational performance.

Paper Information