Do People Who Care About Others Cooperate

More? Experimental Evidence from Relative

Incentive Pay ∗

Pablo Hernandez

New York University AD

Dylan Minor

Northwestern University

Dana Sisak

Erasmus University Rotterdam

& Tinbergen Institute

This version: September 2015


We experimentally study ways in which the social preferences of individuals

and groups affect performance when faced with relative incentives. We also

identify the mediating role that communication and leadership play in generating

these effects. We find other-regarding workers tend to depress efforts by

15% on average. However, selfish workers are nearly three times more likely

to lead workers to coordinate on minimal efforts when communication is possible.

Hence, the other-regarding composition of a team of workers has complex

consequences for organizational performance.

Keywords: Social Preferences, Relative Performance, Collusion, Leadership

∗ We would like to thank participants of seminars and conferences in Norwich, Rotterdam,

Mannheim, Munich, Trier, Fresno, Budapest, Chicago, Zurich, Amsterdam as well as Juan Atal,

Ernesto Dal Bo, Josse Delfgaauw, Robert Dur, Dirk Engelmann, Sacha Kapoor, Martin Kolmar,

John Morgan, Felix Vardy and Bauke Visser.


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