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The Carrot vs. the Stick in Work Team Motivation

Published online by Cambridge University Press:  14 March 2025

David L. Dickinson
David L. Dickinson*
Affiliation:
Department of Economics, Utah State University, 3530 Old Main Hill, Logan, UT 84322-3530, USA
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Abstract

This paper reports on the use of carrot (positive) and stick (negative) incentives as methods of increasing effort among members of work teams. We study teams of four members in a laboratory environment in which giving effort towards the team goal is simulated by eliciting voluntary contributions towards the provision of a public good. We test the efficiency-improving properties of four distinct environments: monetary prizes given to high contributors versus monetary fines assessed to low contributors, where high/low contributor is defined first in terms of absolute contributions and then in terms of contributions relative to abilities—which we call handicapping. Our results show that both carrot and stick can increase efficiency (i.e., contributions) levels by 10-28%. We find that handicapped incentives promise the highest efficiency levels, and when handicapping is not used penalties may be more effective than prizes. The implications for work teams and suggestions for practical implementation are discussed.

Keywords

experimentswork teamspublic goodspayment methods

JEL classification

H41: Public Goods J4: Particular Labor Markets J33: Compensation Packages • Payment Methods C92: Laboratory, Group Behavior
Type
Research Article
Information
Experimental Economics , Volume 4 , Issue 1 , June 2001 , pp. 107 - 124
Copyright
Copyright © 2001 Economic Science Association

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