American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Free Riding and Unequal Pay in Symmetric Teams
American Economic Journal: Microeconomics
(pp. 289–323)
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 (i) agents are relatively patient or few, or (ii) 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.Citation
Yildirim, Huseyin. 2025. "Free Riding and Unequal Pay in Symmetric Teams." American Economic Journal: Microeconomics 17 (3): 289–323. DOI: 10.1257/mic.20230179Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- M52 Personnel Economics: Compensation and Compensation Methods and Their Effects