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The evolution of cooperative norms: evidence from a natural field experiment

By Oriana Bandiera, Iwan Barankay and Imran Rasul

Abstract

We document the establishment and evolution of a cooperative norm among workers using evidence from a natural field experiment on a leading UK farm. Workers are paid according to a relative incentive scheme under which increasing individual effort raises a worker's own pay but imposes a negative externality on the pay of all co-workers, thus creating a rationale for cooperation. As a counterfactual, we analyse worker behaviour when workers are paid piece rates and thus have no incentive to cooperate. We find that workers cooperate more as their exposure to the relative incentive scheme increases. We also find that individual and group exposure are substitutes, namely workers who work alongside colleagues with higher exposure cooperate more. Shocks to the workforce in the form of new worker arrivals disrupt cooperation in the short term but are then quickly integrated into the norm. Individual exposure, group exposure, and the arrival of new workers have no effect on productivity when workers and paid piece rates and there is no incentive to cooperate

Topics: HB Economic Theory, HD Industries. Land use. Labor
Publisher: Centre for Economic Policy Research
Year: 2005
OAI identifier: oai:eprints.lse.ac.uk:5383
Provided by: LSE Research Online
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