"This project focuses on how individuals' performances in workplaces can be improved through tournaments. In that respect, we analyze different team contest environments. In the first part of the project, we try to understand whether the organization of team contests enhances productivity compared to performance in individual contests by looking two different team-production functions: In the first environment team members can collaborate by dividing tasks across the team (input-substitutable); in the second one, each team member must complete both tasks in order to contribute to the team’s output (output-substitutable). In particular, while in the first environment, if teammates with complementary skills are able to allocate the team's tasks efficiently, teams can achieve higher output level compared to individual level, in the second one output level can be lower due to free-riding incentives. Further, we analyze the role of communication in team contests. In the second part of the project, by using the same production functions, we try to understand how allowing individuals to form their teams by themselves affects team output. Further, we try to understand how individuals' preferences over their potential teammates change as team-production functions change.
Many firms employ team-based incentives in production and the use of such incentives can affect worker productivity in different ways. First, team incentives can affect how much effort individuals put into their work, as team compensation introduces incentive to free-ride off of co-workers’ efforts or, alternatively, may encourage individuals to work harder so as not to let down their teammates. A large body of theoretical and experimental work has studied the motivations of workers in team production environments, with experimental evidence regularly finding that free-riding is lower than predicted, especially when teams are engaged in a competition with another team. Second, the use of teams can affect how workers direct their efforts. If workers have complementary skills, then organizing them into teams may enable workers to allocate more time to the tasks at which they personally excel. While productivity gains from worker complementarities is considered a primary advantage of organizing workers into teams, this effect is largely unstudied in the experimental literature. Further these complementarities can affect how teams are formed ""endogenously"" which also has not been studied in the literature. Most studies in the literature assume either that all team members are engaged in the same, substitutable task or that their efforts are perfect complements, our environment allows us to study whether teams allocate work in order to exploit gains from complementary skills as in the real world.
If firms implement team contests with the goal of maximizing workers' output, then the question of whether teammates can self-organize and divide work efficiently is fundamental to understanding the productivity of teams. Overall objective of the project is in addition to the significant contribution to the literature, to contribute to workplace innovation policy of Europe, which aims at “… improving staff motivation, thereby enhancing labor productivity, organizational performance, innovation capability, and consequently business competitiveness”."
