COMPETITION AND COOPERATION IN THE WORKPLACE

This paper examines promotion systems which are competitive (a tournament) or noncompetitive (a quota scheme). We introduce helping technologies where some aid to co-workers is efficient and consider various worker bargaining strategies. It is shown that the competitive scheme consistently prevents helping efforts, while the non-competitive scheme induces an efficient allocation of effort if workers bargain over help. Because the non-competitive scheme is less risky, it may dominate the competitive scheme even if workers do not help each other. If workers bargain over help, the non-competitive scheme will typically enhance welfare. © 1991.