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156 Marshall Van Alstyne and Nathaniel BulkleyAnother economic principle – aligning incentives with outcomes encouragesproper behavior – suggests that when organizational information sharing isdesired, absolute incentives may have an advantage over relative incentives.The intuition follows from a classroom grading example: under an absoluteincentive scheme, every student who scores 90 percent or higher gets an “A.”One successful student does not displace another but group study can lowerindividual effort. Under a relative scheme, the top 10 percent of the studentsget an “A” regardless of the actual score. Students are ranked relative to oneanother and may work hard to beat out other students. Assuming self-interestedbehavior, the former policy promotes sharing, while the later discouragesit. An axiomatic model of this phenomenon is developed in Van Alstyne andBrynjolfsson (1995), while the motivation follows from Orlikowski’s (1992)case study of groupware use in a competitive up-or-out consulting firm.Orlikowski found that junior consultants refused to share information for fearof losing strategic advantage, while senior consultants, who were rewardedbased on the absolute performance of the firm, willingly shared information.The optimal incentive policy is hypothesized to depend on the degree of taskinterdependence, which correlates with increased information sharing.Hypothesis 4: Absolute incentives encourage information sharing, whichpromotes group productivity; relative incentives discourage information sharing,but promote individual productivity. The optimal incentive policy in termsof productivity becomes increasingly absolute with increasing task interdependence.Evidence from recruiter surveys correlates well with incentive theorypredictions. Employees of the firm reporting the greatest weight on individualperformance reported sharing the least information. Those of the firm reportingthe greatest weight on team performance reported moderate informationsharing. Those reporting the greatest weight on whole company performancereported the most sharing. No firm in the study employs more than 150recruiters so these positive benefits may be contingent on firm size.Having information, firms and individuals must decide what to do with it.Hirshleifer (1971) emphasizes that one valuable technique is to use “informationpush” to arbitrage supply of and demand for a resource. By predicting orcausing future changes and controlling a key resource, one can disseminatenews widely in order to profit from the shift. Such news resolves uncertaintyover market opportunities and benefits those who acted early to control undervaluedassets. This represents a classic example of reduced inefficiency as infigure 6.2a and leads to:Hypothesis 5: Information push benefits individuals and organizations thatcontrol undervalued assets (owners of overvalued assets incur losses).Efficiency increases when resource allocations rebalance to account for problemsand opportunities.