I believe that some readers may have had the experience of resenting their workplace or losing the motivation to work because they were assigned undesired tasks and, as a result, wasted working hours looking at social media sites or checking private emails. In order to enhance productivity within a firm, it is essential to keep workers motivated and control moral hazard behavior (shirking) by providing an appropriate working environment. As employers are unable to fully observe workers’ behavior in the workplace, in many cases the collective performance of a team or division is taken into consideration in determining the amount of compensation or other remuneration for individuals. However, as was argued by Alchian and Demsetz (1972) and Holmstrom (1982), under such a revenue-sharing arrangement, workers feel tempted to avoid hard work by free-riding on their colleagues’ contributions to the workplace. This column introduced readers to the findings of a research paper co-authored by the author and Professor Markussen at the University of Copenhagen (Kamei and Markussen, forthcoming). This paper experimentally shows that low productivity and moral hazard behavior, such as shirking, are prevalent among workers assigned with “undesired tasks” (externally imposed tasks that they do not enjoy). At the same time, this paper proposes that worker participation in the process of task assignment is effective in mitigating the negative effects of mismatching between task preference and task assignment.
A laboratory experiment makes it possible to show a causal relationship with a high degree of validity. Our experiment was conducted in the Laboratory for Experimental Economics of the University of Copenhagen in 2018 and 2020. A total of 601 students participated in the experiment as subjects.
417 of the 601 subjects participated in the experimental sessions where a team-based remuneration system was used. In these sessions, the participants were randomly divided into teams of three, with each team assigned either an “addition” task or a “counting” task, and then the team members individually worked on the task assigned to their own team for 30 minutes. Two treatments were designed. In one treatment condition, one of the two tasks was randomly assigned to each team. In the other treatment condition, the task assignment was made by a majority vote among the three team members. The remuneration was based on revenue sharing: each team member received a third of the total earnings generated by the task-solving activities in the team.
To read the full text:
“Beyond the Era of Non-testable Science: Field experiments making inroads into the world of economics”
ITO Koichiro (Visiting Fellow, RIETI)
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