I Take Care of My Own: A Field Study on How Leadership Handles Conflict between Individual and Collective Incentives

摘要

From the early literature on the role of firm managers (Alchian and Demsetz 1972) to the industrial organization on contracts and mechanism design (Laffont and Martimort 2009), economists have given a lot of attention to find solutions to the imperfect alignment between individuals' incentives and an organization's collective goals (Prendergast 1999). In that literature a key role of managers is to monitor individuals to reward behavior aligned with the collective goals and reduce suboptimal behavior, such as shirking. However, another strand of literature, since Akerlof (1982), has put forward a vision of reciprocal behavior between an organization's leadership and its members: gifts (high wages, recognition) from the organization are reciprocated by high effort from the members of the organization. By rewarding individual members (rather than strictly monitoring them), organizations may benefit from greater effort and cohesion. Experimental research in organizational economics has provided mixed results suggesting that agents do react to personal incentives but also that reciprocal behavior can play a substantial role (Camerer and Weber 2013). This study contributes to the empirical literature investigating how the existence of individual specific incentives affects individuals' behavior in organizations, and how leadership deals with such incentives. We use cricket matches as the setting of a naturally occurring quasi-experiment where variations in individual-specific incentives and individual and team strategies are observable. Namely, we use an existing discontinuity in batsmen's individual specific rewards around milestones (scoring 50, 100, or 200). This discontinuity allows us to cleanly identify a causal effect of individual-specific incentives on players' and team captains' strategic behavior. We find that, in line with traditional industrial organization literature, players react to these incentives by adopting suboptimal strategies for the team. However, we also find that team captains adjust their strategies to allow batsmen to reach these individual rewards. We conjecture that captains' behavior may be the telltale sign of an implicit norm whereby they are expected to care about each player's individual rewards. Such a norm can be efficient if it leads to a higher level of effort and team cohesion in line with Akerlof's gift exchange mechanism. Such findings suggest that the relation between individual-specific incentives and team incentives may be more complex than the conflict assumed in most standard economic models.