Team Incentives and Performance: Evidence from a Retail Chain†

Team Incentives and Performance: Evidence from a Retail Chain† AbstractIn a field experiment with a retail chain (1,300 employees, 193 shops), randomly selected sales teams received a bonus. The bonus increases both sales and number of customers dealt with by 3 percent. Each dollar spent on the bonus generates $3.80 in sales, and $2.10 in profit. Wages increase by 2.2 percent while inequality rises only moderately. The analysis suggests effort complementarities to be important, and the effectiveness of peer pressure in overcoming free-riding to be limited. After rolling out the bonus scheme, the performance of the treatment and control shops converges, suggesting long-term stability of the treatment effect. (JEL D22, J31, J33, L25, L81, M53, M54) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

Team Incentives and Performance: Evidence from a Retail Chain†

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Publisher
American Economic Association
Copyright
Copyright © 2017 © American Economic Association
ISSN
0002-8282
D.O.I.
10.1257/aer.20160788
Publisher site
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Abstract

AbstractIn a field experiment with a retail chain (1,300 employees, 193 shops), randomly selected sales teams received a bonus. The bonus increases both sales and number of customers dealt with by 3 percent. Each dollar spent on the bonus generates $3.80 in sales, and $2.10 in profit. Wages increase by 2.2 percent while inequality rises only moderately. The analysis suggests effort complementarities to be important, and the effectiveness of peer pressure in overcoming free-riding to be limited. After rolling out the bonus scheme, the performance of the treatment and control shops converges, suggesting long-term stability of the treatment effect. (JEL D22, J31, J33, L25, L81, M53, M54)

Journal

American Economic ReviewAmerican Economic Association

Published: Aug 1, 2017

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