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  3. American Economic Review
  4. August 2017
  5. Team Incentives and Performance: Evidence from a Retail Chain

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Team Incentives and Performance: Evidence from a Retail Chain

  • Guido Friebel
  • Matthias Heinz
  • Miriam Krueger
  • Nikolay Zubanov
American Economic Review
vol. 107, no. 8, August 2017
(pp. 2168–2203)
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Abstract

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.

Citation

Friebel, Guido, Matthias Heinz, Miriam Krueger, and Nikolay Zubanov. 2017. "Team Incentives and Performance: Evidence from a Retail Chain." American Economic Review, 107 (8): 2168–2203. DOI: 10.1257/aer.20160788

Additional Materials

JEL Classification

  • D22 Firm Behavior: Empirical Analysis
  • J31 Wage Level and Structure; Wage Differentials
  • J33 Compensation Packages; Payment Methods
  • L25 Firm Performance: Size, Diversification, and Scope
  • L81 Retail and Wholesale Trade; e-Commerce
  • M53 Personnel Economics: Training
  • M54 Personnel Economics: Labor Management