Managers’ dilemmas: an experimental study on the effects of sequencing and the pecuniary consequences of sanctioning on worker cooperation

Abstract Managers are usually bestowed with multiple mechanisms to elicit cooperation from subordinates. Given that these mechanisms are often employed concurrently, it is imperative to understand how their joint deployment influences worker cooperation. Using a public goods game, we experimentally manipulate two mechanisms which constitute salient features of management, namely (a) manager contribution sequencing, and (b) the pecuniary implications for the manager when applying sanctions by punishing or rewarding subordinates. Surprisingly, our findings demonstrate that neither mechanism has a direct significant effect on group cooperation levels, but that they considerably affect manager and worker behavior on both the individual and group level. In certain treatments, rewards significantly improve contributions, while punishments, when significant, always reduce contributions. Moreover, second-mover managers who bear the pecuniary consequences of their sanctioning experience negative and significant effects on group contributions when they frequently reward or punish, indicating that habitual sanctioning can become detrimental regardless of its type. The findings suggest that managers’ behavior can considerably affect the typically salient motives of reciprocity and inequality aversion among workers. We further discuss how these subtle effects reflect the dilemmas that managers face when endeavoring to boost the cooperation levels of their subordinates.