Team Incentives and Performance: Evidence from a Retail Chain

Friebel, G., Heinz, M., Krüger, M., & Zubanov, N. (2015), “Team Incentives and Performance: Evidence from a Retail Chain." American Economic Review, Vol. 107, Issue 8 — August 2017. * [working paper]

Guido Friebel, Matthias Heinz, Miriam Krueger and Nikolay Zubanov
In 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 treatment, and control shops’ performance converge, suggesting long-term stability of the treatment effect.
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eTOC for American Economic Review Vol. 107, Issue 8 — August 2017
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