مقایسه تجربی قرارداد های تشویقی در مشارکت ها

Empirical work comparing individualized sharing and equal sharing schemes in partnerships has produced mixed results. Some studies find individualized sharing schemes superior, others find no difference, and still others find equal sharing schemes superior. This paper outlines a theory which reconciles these competing findings, and tests it with an experiment. We find that in conditions of high synergy (when the teammate’s effort has a proportionately larger impact on an agent’s output than the agent’s own effort), equal sharing schemes outperform individualized sharing schemes, while in conditions of low synergy, individualized sharing schemes outperform equal sharing schemes. These results are consistent with observations from the field. Our results have the potential to guide firms choosing between competing compensation contracts by identifying situations under which each contract type is likely to yield increased productivity.

Partnerships are commonly observed in firms, representing 100% of the top 100 law firms, 56% of the top 100 accounting firms, and 18% of the top 100 architecture firms (Greenwood & Empson, 2003). Labor contracts within partnerships take varying forms. Two common forms involve individualized sharing schemes and equal sharing schemes.1 As the names suggest, in individualized sharing schemes the compensation of partnership members is their own individual output,2 while in equal sharing schemes, their compensation is a function of the team output. In practice, however, individual output is often a function not only of one’s own efforts, but of others’ efforts as well (Alchian & Demsetz, 1972). This effect is referred to as team synergy (Lawford, 2003). Synergy effects can be frequently observed in partnerships. In a medical partnership, for example, the number of surgeries a doctor can perform (and be paid for) may depend on their partners’ availability for collaborations. Although synergy is a common feature of partnerships, its impact on the efficiencies of various incentive contracts is still vaguely understood and has not been systematically examined in the literature (Alchian and Demsetz, 1972 and Rose, 2002). Observational and experimental evidence comparing the effectiveness of equal sharing and individualized sharing has been mixed, with some studies finding individualized sharing superior (Encinosa et al., 2007, Gaynor and Gertler, 1995 and Nalbantian and Schotter, 1997), others finding no difference (Dijk et al., 2001 and Vandegrift and Yavas, 2011), and still others finding equal sharing superior (Chan et al., 2012, Hamilton et al., 2003 and Pizzini, 2010). In this paper we provide an organizing explanation for these mixed results. We show both theoretically and experimentally that when team synergy is high (characterized by a large degree of complementarity between one’s own effort and the effort exerted by teammates), equal sharing schemes outperform individualized sharing schemes. When team synergy is low, the opposite is true. The intuition for our result is straightforward. Equal sharing schemes internalize effort externalities but include incentives for free riding. When effort externalities are sufficiently high, the former effect outweighs the latter and equal sharing schemes outperform individualized sharing schemes. When effort externalities are not sufficiently high, the free-riding incentives outweigh the benefit from internalizing the effort externality, and individualized sharing schemes outperform equal sharing schemes. Our results are consistent with previous observations from the field, including the prevalence of equal sharing in high-synergy specialties (for example, emergency medicine) and the dominance of individualized sharing in low-synergy specialties (for example, psychiatry) (Adams, 2006, Pauly, 1996 and Pizzini, 2010). Finally, our results have the potential to guide partnerships choosing between competing compensation contracts by identifying situations under which each contract type is likely to yield increased productivity.

This paper theoretically and experimentally compares worker behavior in partnerships under conditions of high and low synergy and team and individual incentives. We find, as predicted, that efforts are significantly higher under individualized sharing in conditions of low synergy, and under equal sharing in conditions of high synergy. These results have important implications for our understanding of labor contracts and the compensation structures of partnerships. They help us to explain the puzzling frequency (and apparent success) of team incentive schemes in the presence of the incentive to free-ride. They allow us to predict when a partnership will choose team incentives (in conditions of high synergy) or individual incentives (in conditions of low synergy). Finally, our results make active recommendations for what types of contracts firms should choose, given their level of synergy. Future work is needed to reinforce our understanding about the effect of synergy on contract selection. One possible direction is to construct a measure of synergy level in practice. Previous studies have identified a few determinants of synergy including heterogeneity of worker ability (Chan et al., 2012 and Hamilton et al., 2003), heterogeneity of worker specialty (Lasker et al., 2001 and Pizzini, 2010), presence of assembly line work, need to cross-train workers, high absence costs, high job attachment (Brown et al., 2007, Heywood and Jirjahn, 2009 and Heywood et al., 2008), and level of social capital (Bandiera et al., 2010 and Gant et al., 2002). However, a comprehensive synergy evaluation mechanism is still needed, and may require involvement of both academia and industry. Another possible extension of our experiment is to include comparisons of other contract types under various synergy levels. For example, Chao and Siqueira (2013) provide theoretical predictions for the comparison between team output contracts and mixed contracts, which could be experimentally tested. Finally, as discussed in Section 2, peer monitoring is a competing explanation for the differential performance of these two contractual types. In our experiment we hold monitoring constant (always present) to focus on the impact of synergy, but in the field both may be relevant. For example, equal sharing schemes are more likely to be adopted by partners who have known each other for a long period of time. Two reasons suggest themselves. First, long-term relationships generate a high level of synergy due to the establishment of social capital (Bandiera et al., 2010 and Gant et al., 2002). But alternatively, long-term relationships make monitoring less costly (Kandel and Lazear, 1992 and Mas and Moretti, 2009). Future work might investigate the relative importance of these competing explanations. In conclusion, this study adds to our understanding of conditions under which individuals will exert effort or shirk in partnership settings. Ultimately this improved understanding has the potential to increase our ability to engage in contract design and elicit optimal effort levels from partners in a variety of settings.