Working Paper: CEPR ID: DP5358
Authors: Oriana Bandiera; Iwan Barankay; Imran Rasul
Abstract: We document the establishment and evolution of a cooperative norm among workers using evidence from a natural field experiment on a leading UK farm. Workers are paid according to a relative incentive scheme under which increasing individual effort raises a worker's own pay but imposes a negative externality on the pay of all co-workers, thus creating a rationale for cooperation. As a counterfactual, we analyse worker behaviour when workers are paid piece rates and thus have no incentive to cooperate.We find that workers cooperate more as their exposure to the relative incentive scheme increases. We also find that individual and group exposure are substitutes, namely workers who work alongside colleagues with higher exposure cooperate more. Shocks to the workforce in the form of new worker arrivals disrupt cooperation in the short term but are then quickly integrated into the norm. Individual exposure, group exposure, and the arrival of new workers have no effect on productivity when workers and paid piece rates and there is no incentive to cooperate.
Keywords: cooperation; group exercise; individual exposure
JEL Codes: C93; M52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| individual exposure to the relative incentive scheme (J33) | cooperation (P13) |
| group exposure to the relative incentive scheme (C92) | cooperation (P13) |
| arrival of new workers (J69) | disruption of cooperation (D74) |
| disruption of cooperation (D74) | increase in productivity among existing workers (O49) |
| new arrivals adapting to the cooperative norm (Z13) | restoration of cooperation (D74) |
| relative incentive scheme (J33) | cooperation (P13) |