Chapter 8
Another name for team is...
Committee
What is the problem statement of the article?
"How can members of a team be rewarded and induced to work efficiently?”
The phenomenon when workers hide behind the productivity of others is known as
free-rider effect
What was introduced as an incentive device?
team bonus of 300€ per month
Explain the tradeoff of optimal team size
small teams do not allow for enough information transfer; large teams create communication problems
How did the bonus effect affect sales and operational profit?
each dollar invested in the bonus raised sales by $3.8 and operational profit by $2.1
Explain both mechanisms for team member selection
alternating draws: teams choose members in an alternating fashion --> inefficient allocation
bidding for members: team with highest bid wins the member --> efficient allocation
Why was the sales increase observed only at stores in the city and not in the countryside?
the higher effort did not result in higher average sales per customer; the extra effort was allocated into dealing more efficiently with the flow of incoming customers.
Name both conditions necessary to ensure a valuable knowledge transfer in teams
1. member have idiosyncratic pieces of information that can flow among members
2. the idiosyncratic information possessed by one member is valuable for others
What is "gaming" and why was it not a real issue in the case of the retail stores?
Occurs when employees calibrate sales effort in order to just pass the bonus threshold. The risk of gaming is limited because the incentive is relatively small