Excludability: A laboratory study on forced ranking in team production

https://doi.org/10.1016/j.jebo.2015.03.005Get rights and content
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Highlights

  • We experimentally design an incentive mechanism “excludability” for team environments.

  • We implement excludability in three experimental team environments.

  • We provide evidence of how the incentive mechanism works in the laboratory.

  • We find that excludability is a very effective team incentive mechanism.

  • We discuss our findings in a theoretical model of reciprocity.

Abstract

Exclusion has long been employed as a common disciplinary measure against defectors, both at work and in social life. In this paper, we study the effect of excludability – exclusion of the lowest contributor – on contributions in three different team production settings. We demonstrate theoretically and experimentally that excludability increases contributions. Excludability is particularly effective in production settings where the average or maximum effort determines team production. In these settings, we observe almost immediate convergence to full contribution. In settings where the minimum effort determines team production, excludability leads to a large increase in contributions only if the value of the excluded individual's contribution to the public good is redistributed among the included individuals.

JEL classification

C72
C92
H41

Keywords

Cooperation
Competition
Exclusion
Linear public goods games
Best-shot mechanism
Weakest-link mechanism

Cited by (0)

Enrique Fatas gratefully acknowledges the financial support of the ESRC Network for Integrated Behavioural Science (NIBS). The scientific research presented in this publication has also been given financial support by the National Research Fund of Luxembourg (F2R-368 LSF-PMA-13SYSB). We also thank participants at the Economic Science Association meetings for helpful suggestions and comments.