Variation In Incentives Research Articles

Learning from Peers: Knowledge Transfer and Sales Force Productivity Growth

We study how peers impact worker productivity growth among salespeople in the cosmetics department of a department store. We first exploit a shift assignment policy that creates exogenous variation in salespersons' peers each week to identify and quantify sources of worker learning. We find that peer-based learning is more important than learning-by-doing for individuals, and there is no evidence of forgetting. Working with high-ability peers substantially increases the long-term productivity growth of new salespeople. We then examine possible mechanisms behind peer-based learning by exploiting the multiple colocated firms in our setting that sell products with different task difficulties and compensate their sales forces using either team-based or individual-based compensation systems. The variation in incentives to compete and cooperate within and across firm boundaries, combined with variation in sales difficulty for different product classes, allows us to suggest two mechanisms behind peer-based learning: observing successful sales techniques of peers and direct teaching. Our paper advocates the importance of learning from one another in the workplace and suggests that individual peer-based learning is a foundation of both organizational learning curves and knowledge spillovers across firms.

Modeling Regional Externalities with Heterogeneous Incentives and Fixed Boundaries: Applications to Foot and Mouth Disease Control in South America*

F or over a century, the countries of South America's Southern Cone1 have struggled to control or eradicate foot and mouth disease (FMD). These efforts have been undermined by a pronounced spatial spillover of the FMD virus. Because the virus spreads readily, the effectiveness of control efforts in one country, or on one ranch, is influenced by control efforts in nearby countries or ranches. These spatial effects are compounded by variations in incentives to control the disease and diverse sensitivities to neighbors. This paper demonstrates how control behavior is affected by spatial spillovers of varied intensity and by heterogeneous incentives to control disease. The decision to control disease is framed as a spatial game in which the behavior of neighbors influences the payoffs to individuals from control effort. Because trade, geographic, and policy factors can leave some individuals more susceptible to their neighbors' actions than others, we impose hard boundaries that constrain disease spread and modulate the intensity of spillovers. Divergent incentives to control disease are modeled by fixing some individuals in specific

The Impact of Interest-rate Subsidies on Long-term Household Debt: Evidence from a Large Program

The responsiveness of long-term household debt to the interest rate is a crucial parameter for assessing the effectiveness of public policies aimed at promoting specific types of saving. This paper estimates the effect of a reform of Credito Bonificado, a large program in Portugal that subsidized mortgage interest rates, on long-term household debt. The reform established a ceiling in the price of the house that could be financed through the program, and provides plausibly exogenous variation in incentives. Using a unique dataset of matched household survey data and administrative records of debt, we document a large decrease in the probability of signing a new loan after the removal of the subsidy.

Spatial Variation in Incentives to Work and Hysteresis in Welfare

This paper suggests a novel explanation of the steady rise in Germany's welfare recipient numbers. In the paper's model, there are disadvantaged households employed in a city with few amenities (a bad-amenity city) who would prefer to receive welfare in a city with many amenities (a good-amenity city). They can be kept out by the good-amenity city's local government but only until a recession sets in. Then they do move from employment in the bad-amenity city into welfare in the good-amenity city. Hysteresis in welfare results.

Instrumental Performance as a Function of Increasing and Decreasing Delays of Reinforcement

Rats (N=56) were trained in a runway under increasing (I), decreasing (D), and random (R) conditions of delay. Each group was then split with one-third of Ss being extinguished under I, D, and R conditions of delay-box confinement. Both delay patterns in training and confinement patterns in extinction affected resistance to extinction. The results were considered in terms of: (a) cognitive-dissonance theory; (b) the work of Marx, et al. on ordered variations in incentives; and (c) previous work which has demonstrated the importance of delay-box confinement in extinction and the direction of shifts in delay from training to extinction.

Influence of amount of reward on maze learning in hooded and albino rats

Hooded and albino rats learned a Y maze under high-and low-reward conditions. The albinos were superior. Ss receiving high reward made fewer errors than Ss given low reward, confirming recent findings that even with the absolute method quantitative variation in incentives influences learning measures.