Profit sharing and peer reporting

Jeffrey Carpenter*, Andrea Robbett, Prottoy A. Akbar

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

12 Citations (Scopus)

Abstract

Despite the "1/N problem" associated with profit sharing, the empirical literature finds that sharing profits with workers has a positive impact on work team and firm performance. We examine one possible resolution to this puzzle by observing that, although the incentive to work harder under profit sharing is weak, it might be sufficient to motivate workers to report each other for shirking, especially if the workers are reciprocally minded. Our model provides the rationale for this conjecture, and we discuss the results of an experiment finding that workers who share in firm profits are more willing to provide accurate information about their peers to management and that profit sharing is most effective when peer reporting is possible.

Original languageEnglish
Pages (from-to)4261-4276
Number of pages16
JournalManagement Science
Volume64
Issue number9
DOIs
Publication statusPublished - Sept 2018
MoE publication typeA1 Journal article-refereed

Keywords

  • Experiment
  • Peer reporting
  • Profit sharing
  • Reciprocity
  • Team production

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