| Abstract: |
We use experiments to compare two institutions for allocating the proceeds of
team production. Under revenue-sharing, each team member receives an equal
share of team output; under leader-determined shares, a team leader has the
power to implement her own allocation. Both arrangements are vulnerable to
opportunistic incentives: under revenuesharing team members have an incentive
to free-ride, while under leader-determined shares leaders have an incentive
to seize team output. We find that most leaders forego the temptation to
appropriate team output and manage to curtail free-riding. As a result,
compared to revenue-sharing, the presence of a team leader results in a
significant improvement in team performance. |