Bonus incentives and team effort levels: Evidence from the “Field”*
| DOI | http://doi.org/10.1111/sjpe.12249 |
| Author | Robert Butler,Liam J. A. Lenten,Patrick Massey |
| Date | 01 November 2020 |
| Published date | 01 November 2020 |
Scott J Polit Econ . 2020;67:539–550. wileyonlinelibrary.com/journal/sjpe
|
539
© 2020 Scottis h Economic Societ y
1 | INTRODUCTION AND LITERATURE
It is well establ ished how bonus schemes affec t incentive structures at a n individual level, while more re cent
literature cont inues to contribute to this them e. Bénabou and Tirole (2016) asses s bonus pay along several la-
bour-market dimension s, while Holmst röm (2017) serves a s an elegant prim er on several relate d issues far
wider than just t he existence of the bon us itself. However, empirical e conomic literature o n how bonuses affec t
the collecti ve performance of fixed t eams of workers in a state of comp etition remains limite d—something that
Accepted: 7 May 202 0
DOI: 10 .1111/sjpe.1 2249
ORIGINAL ARTICLE
Bonus incentives and team effort levels: Evidence
from the “Field”*
Robert Butler1 | Liam J. A. Lenten2 | Patrick Massey3
*Earlier ver sions of this pape r were presente d in August 2017 at the E uropean Spor ts Economic s Association C onference in Pa derborn, and
September 2 018 in seminars at : (i) San Andrés U niversity; a nd (ii) Torcuato Di Tella Un iversity; as we ll as in June-July 2019 at se minars at: (ii i) La
Trobe Universit y; and (iv) Univ ersity of Melb ourne. We are grat eful to the semin ar participa nts for helpfu l comments, es pecially Mar tín Rossi,
Christian R uzzier and Lean dro Arozamena . The authors a lso wish to thank P aul Holmes, Do rian Owen, Vin cent Hogan, Davi d Butler and Jus tin
Doran (in ad dition to two ano nymous reviewe rs for this Journ al) for similar ly useful comme nts.
1Department of Economics, University
College Cork , Cork, Ireland
2Euler Capital, Drysdale, Vic., Australia
3Compecon Limited, Dublin, Ireland
Correspondence
Robert But ler, Department of Eco nomics,
Universit y College Cork, Col lege Road, Cork
T12 YN60, Irelan d.
Email: r.butler@ucc.ie
Abstract
This study explo res the effect of b onus incentive mecha-
nisms with a focus on how such a s cheme influences aggre-
gate production l evels of teams of workers, specifically. We
identify this usin g data from a highly comp etitive setting in
professional spor t, which involves a unique tournament de-
sign rule in an elite Europe an rugby competition. The mo del-
ling results demo nstrate qualified evidence that int roducing
bonuses to encoura ge teams to score via the most-difficult,
highest-reward mode, incent ivizes teams to increase ef fort
to earn the bonus, an d without reducing p roduction afte r
the bonus is achieved.
KEYWORDS
bonuses, ef fort, incentives, sp ort, teams
JEL CLASSIFI CATION
Z28; C21; D91
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