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Risk-sorting and preference for team piece rates

TLDR
In this article, a sorting decision between two variable compensation systems, where both options carry wage risks, is studied, and the authors find evidence for both risk diversification considerations and free-riding concerns as drivers of self-selection.
About
This article is published in Journal of Economic Psychology.The article was published on 2013-02-01 and is currently open access. It has received 48 citations till now. The article focuses on the topics: Sorting & Wage.

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Citations
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Does commuting matter to subjective well-being?

TL;DR: In this paper, the relation between commuting and subjective well-being by considering several cognitive (e.g., satisfaction with family life, leisure, income, work, health) and affective components of subjective wellbeing was analyzed.
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Direct Evidence for Income Comparisons and Subjective Well-Being Across Reference Groups

TL;DR: In this article, the authors provide evidence for the relationship between income comparisons and subjective well-being (SWB), using novel German data on self-reported comparison intensity and perceived relative income for seven reference groups.
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All on board? New evidence on board gender diversity from a large panel of European firms

TL;DR: In this paper, the authors examine industry sector and national institution drivers of the prevalence of women directors on supervisory and management boards in both public and private firms across 41 advanced and emerging European economies.
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Do Overconfident Workers Cooperate Less? The Relationship Between Overconfidence and Cooperation in Team Production

TL;DR: This paper examined the relationship between individual overconfidence and voluntary cooperation in team production and found that overconfident men hold more optimistic beliefs about coworkers' cooperativeness than men who lack confidence and are accordingly significantly more cooperative.
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Concerns about the Euro and happiness in Germany during times of crisis

TL;DR: In this paper, the authors investigated whether people's concerns about the Euro currency affect their life satisfaction and found that a minority of very concerned individuals appear to be unhappy, which cannot be explained by personality or other observable factors typically affecting well-being.
References
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z-Tree: Zurich toolbox for ready-made economic experiments

TL;DR: Z-Tree as mentioned in this paper is a toolbox for ready-made economic experiments, which allows programming almost any kind of experiments in a short time and is stable and easy to use.
Journal ArticleDOI

Risk Aversion and Incentive Effects

TL;DR: In this article, a menu of paired lottery choices is structured so that the crossover point to the high-risk lottery can be used to infer the degree of risk aversion, and a hybrid "power/expo" utility function with increasing relative and decreasing absolute risk aversion is presented.
Posted Content

Moral Hazard in Teams

TL;DR: In this paper, the authors study moral hazard with many agents and focus on two features that are novel in a multiagent setting: free riding and competition, and show that competition among agents (due to relative evaluations) has merit solely as a device to extract information optimally.
Journal ArticleDOI

Moral Hazard in Teams

TL;DR: In this article, the authors study moral hazard with many agents and focus on two features that are novel in a multiagent setting: free riding and competition, and show that competition among agents (due to relative evaluations) has merit solely as a device to extract information optimally.
Journal ArticleDOI

Risk Aversion and Incentive Effects

TL;DR: In this article, a menu of paired lottery choices is structured so that the crossover point to the high-risk lottery can be used to infer the degree of risk aversion, and a hybrid utility function with increasing relative and decreasing absolute risk aversion nicely replicates the data patterns over this range of payoffs from several dollars to several hundred dollars.
Related Papers (5)
Frequently Asked Questions (8)
Q1. What are the contributions in "Risk-sorting and preference for team piece rates" ?

With this paper, the authors contribute to the literature on drivers of self-selection by analyzing the role of perceived wage risks as potential influences on the sorting decision. To this end, the authors study a sorting decision between two variable compensation systems, where both options carry wage risks. Using experimental data, the authors find evidence for both risk diversification considerations and free-riding concerns ( i. e., risk of teaming-up with low-productive teammates ) as drivers of self-selection. 

In larger teams, risk diversification possibilities are greater, and therefore, the diversification effect on the sorting decision should be stronger. Although common intuition and some of the literature suggest that team-based compensation induces individuals to reduce their effort, the authors find no such effect. Their sorting analysis also shows that, unlike most of the literature claims ( e. g., Kocher et al., 2006 ; Königstein & Ruchala, 2007 ), not absolute productivity but one ’ s productivity in relation to the expected productivity of potential co-workers is decisive in the sorting decision. In line with intuition, this implies that individuals ’ decision to sort into a team depends crucially on their expectations about potential co-workers ’ performance. 

The relative self-assessment measure is intended to catch expectations about an individual’s own and others’ abilities and efforts (i.e., shirking behavior). 

Conscientiousness has a significant and negative impact on the likelihood of sorting into team piece rates, whereas the other personality traits have no effect. 

Given that the coefficient of the risk regarding co-workers’ productivity is larger and of higher statistical significance, the authors suggest that when deciding whether to work under an individual piece rate or a team piece rate, concerns regarding the productivity of potential co-workers might be stronger than risk diversification considerations. 

this lack of significance is likely due to productivity being indirectly incorporated in their measure of the risk of being matched with someone who has lower productivity than oneself. 

In particular, there is a 50 percent chance that an additional number of correct calculations is added to the actual number of correct9 

The question of whether both risk aspects influence individual behavior isdifficult to investigate in the field due to a lack of data.