Peer Evaluation: Incentives and Co-Worker Relations

In many workplaces co-workers have the best information about each other's effort. Managers may attempt to exploit this information through peer evaluation. I study peer evaluation in a pure moral hazard model of production by two limitedly liable agents. Agents receive a signal about their colleague's effort level, and are asked to report it to the principal. The principal may give an individual bonus for the receipt of a positive evaluation by a colleague, which stimulates effort as long as signals are revealed truthfully. A cost of lying ascertains that there can be truthful revelation. I show that interpersonal relations between colleagues constrain the bonus for receiving a positive evaluation in order to keep evaluations truthful. Still, the principal will always include such a bonus in the optimal contract, and possibly complement it with a team bonus. Co-worker relations have non-monotic effects on profits in the optimal contract

Social Interaction, Co-Worker Altruism, and Incentives

Social interaction with colleagues is an important job attribute for many workers. To attract and retain workers, managers therefore need to think about how to create and preserve high-quality co-worker relationships. This paper develops a principal-multi-agent model where agents do not only engage in productive activities, but also in social interaction with their colleagues, which in turn creates co-worker altruism. We study how financial incentives for productive activities can improve or damage the work climate. We show that both team incentives and relative incentives can help to create a good work climate. We discuss some empirical evidence supporting these predictions

Team Incentives, Social Cohesion, and Performance::A Natural Field Experiment

We conduct a field experiment in a Dutch retail chain of 122 stores to study the interaction between team incentives, team social cohesion, and team performance. Theory predicts that the effect of team incentives on team performance increases with the team's social cohesion, because social cohesion reduces free-riding behavior. In addition, team incentives may lead to more co-worker support or to higher peer pressure and thereby can affect the team's social cohesion. We introduce short-term team incentives in a randomly selected subset of stores and measure for all stores, both before and after the intervention, the team's sales performance, the team's social cohesion as well as co-worker support and peer pressure. The average treatment effect of the team incentive on sales is 1.5 percentage points, which does not differ significantly from zero. In line with theory, the estimated treatment effect increases with social cohesion as measured before the intervention. Social cohesion itself is not affected by the team incentives

Tournament Incentives in The Field: Gender Differences in The Workplace

We ran a field experiment in a Dutch retail chain consisting of 128 stores. In a random sample of these stores, we introduced short-term sales competitions among subsets of stores. We find that sales competitions have a large effect on sales growth, but only in stores where the store's manager and a large fraction of the employees have the same gender. Remarkably, results are alike for sales competitions with and without monetary rewards, suggesting a high symbolic value of winning a tournament. Lastly, despite the substantial variation in team size, we find no evidence for free-riding

Evidence from Sibling Correlations

We assess the broad importance of family and community background for entrepreneurship outcomes. We go beyond traditional, intergenerational associations by estimating sibling correlations in unincorporated and incorporated entrepreneurship using register data from Sweden. Sibling correlations range from 20% to 50%. They are consistently higher for more committed and incorporated entrepreneurship than for less committed or unincorporated entrepreneurship; they are also higher for brothers than sisters. We then assess what factors drive these correlations: parental entrepreneurship, neighborhoods, shared genes and financial resources help explain these high correlations, whereas immigration status, family structure and sibling peer effects have a limited contribution. The higher correlation for incorporated versus unincorporated entrepreneurship is explained mainly by the type of parental entrepreneurial engagement and financial resources, while the gap between brother and sister correlations in unincorporated entrepreneurship is largely driven by the geographic concentration of male dominated industries

On the origins of entrepreneurship: Evidence from sibling correlations

Despite the consensus that entrepreneurship runs in the family, we lack evidence regarding the total importance of family and community background, as well as the relative importance of different background influences that affect entrepreneurship. We draw on human capital formation theories to argue that families and communities provide a salient context for the development of individual entrepreneurial skills and preferences, beyond the existing focus on parental entrepreneurship. We posit that early influences are more important than later influences and propose a hierarchy of family influences, whereby genes have the largest explanatory power, followed by parental entrepreneurship, neighborhoods, and parental resources, and finally by parental immigration, family structure, and sibling peers. Finally, we argue that the higher human and financial capital intensity of incorporated relative to unincorporated entrepreneurship predictably alters the hierarchy of family influences, as does gender. Sibling correlations estimated on Swedish register data confirm our hypotheses

On the Origins of Entrepreneurship: Evidence from Sibling Correlations

We assess the broad importance of family and community background for entrepreneurship outcomes. We go beyond traditional, intergenerational associations by estimating sibling correlations in unincorporated and incorporated entrepreneurship using register data from Sweden. Sibling correlations range from 20% to 50%. They are consistently higher for more committed and incorporated entrepreneurship than for less committed or unincorporated entrepreneurship; they are also higher for brothers than sisters. We then assess what factors drive these correlations: parental entrepreneurship, neighborhoods, shared genes and financial resources help explain these high correlations, whereas immigration status, family structure and sibling peer effects have a limited contribution. The higher correlation for incorporated versus unincorporated entrepreneurship is explained mainly by the type of parental entrepreneurial engagement and financial resources, while the gap between brother and sister correlations in unincorporated entrepreneurship is largely driven by the geographic concentration of male dominated industries