This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Microeconomics
  4. Forthcoming Articles
  5. Free-Riding and Unequal Pay in Symmetric Teams

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

Free-Riding and Unequal Pay in Symmetric Teams

  • Huseyin Yildirim
American Economic Journal: Microeconomics (Forthcoming)

Abstract

This paper studies dynamic incentive pay in teams where agents' efforts are perfect substitutes. It shows that the principal may unequally reward identical agents to mitigate dynamic free-riding in the form of procrastination. Unequal pay effectively creates a "team leader" who overworks and symmetric "followers" who underwork. Such leader-follower teams emerge if (1) agents are relatively patient or few, or (2) the principal sufficiently cares about or is not patient for project success. These findings contrast with the recent literature (e.g., Winter, 2004), pinpointing effort complementarity as the source of unequal pay in symmetric teams.

Downloads