Using social connections and financial incentives to solve coordination failure : a quasi-field experiment in India's manufacturing sector / Farzana Afridi (Indian Statistical Institute, Delhi and IZA), Amrita Dhillon (King's College London), Sherry Xin Li (University of Texas at Dallas), Swati Sharma (Indian Statistical Institute, Delhi) ; IZA Institute of Labor Economics
VerfasserAfridi, Farzana ; Dhillon, Amrita ; Li, Sherry Xin ; Sharma, Swati
KörperschaftForschungsinstitut zur Zukunft der Arbeit
ErschienenBonn, Germany : IZA Institute of Labor Economics, May 2018
Elektronische Ressource
Umfang1 Online-Ressource (62 Seiten) : Illustrationen, Diagramme
SerieDiscussion paper ; no. 11521
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Using social connections and financial incentives to solve coordination failure [7.85 mb]
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Production processes are often organised in teams, yet there is limited evidence on whether and how social connections and financial incentives affect productivity in tasks that require coordination among workers. We simulate assembly line production in a lab-in-the-field experiment in which workers exert real effort in a minimum-effort game in teams whose members are either socially connected or unconnected and are paid according to the group output. We find that group output increases by 15% and wasted individual output is lower by 30% when workers are socially connected with their co-workers. Unlike the findings of existing research, increasing the power of group-based financial incentives does not reduce the positive effect of social connections. Our results are driven by men whose average productivity is significantly lower than that of women. These findings can be explained by pro-social behavior of workers in socially connected teams.

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