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IZA DP No. 3959
Treating Equals Unequally: Incentives in Teams,
Workers' Motivation and Production Technology
Sebastian Goerg
Sebastian Kube
Ro'i Zultan
DISCUSSION PAPER SERIES
Forschungsinstitut
zur Zukunft der Arbeit
Institute for the Study
of Labor
January 2009

Treating Equals Unequally:
Incentives in Teams, Workers’
Motivation and Production Technology


Sebastian Goerg
University of Bonn

Sebastian Kube
Max Planck Institute for Research on Collective Goods
and IZA

Ro’i Zultan
Max Planck Institute for Economics



Discussion Paper No. 3959


January 2009




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Citation of such a paper should account for its provisional character. A revised version may be
available directly from the author.
IZA Discussion Paper No. 3959
January 2009







ABSTRACT

Treating Equals Unequally: Incentives in Teams,
Workers’ Motivation and Production Technology


The importance of fair and equal treatment of workers is at the heart of the debate in
organizational management. In this regard, we study how reward mechanisms and
production technologies affect effort provision in teams. Our experimental results
demonstrate that unequal rewards can potentially increase productivity by facilitating
coordination, and that the effect strongly interacts with the exact shape of the production
function. Taken together, our data highlight the relevance of the production function for
organization construction and suggest that equal treatment of equals is neither a necessary
nor a sufficient prerequisite for eliciting high performance in teams.


JEL Classification: C92, D23, D63, J31, J33, J41, M12, M52


Keywords: team incentives, equity, production function, social preferences,
laboratory experiment, discriminating mechanism, mechanism design


Corresponding author:

Sebastian Kube
Max Planck Institute for Research on Collective Goods
Kurt-Schumacher-Str. 10
53113 Bonn
Germany
E-mail:




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p(2) = 65 p(3) = 100
p(3) − p(2) > p(2) − p(1) > p(1) − p(0)
p(3) − p(2) < p(2) − p(1) < p(1) −p(0)
3(4 ·
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240
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.0001
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P rob > |z| = .65 P rob > |z| = .31
p = .012
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p = 1
P rob > |z| = .0261
P rob > |z| = .1552
P rob > |z| = .0649
0.233 0.158
P rob > |z| = .0143
0.068
P rob > |z| = .0979
p = .66 p = .52
p = .98
p ≤ .001 p ≤ .001 p ≤ .001

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