The Allocation of Incentives in Multi-Layered Organizations: Evidence from a Community Health Program in Sierra Leone

by Erika Deserranno, Stefano Caria, Philipp Kastrau, Gianmarco León-Ciliotta

Does the allocation of incentives across the hierarchy of an organization matter for its performance? In an experiment with a large public-health organization, we find that healthcare provision is highly affected by how incentives are allocated between front-line workers and their supervisors. Sharing incentives equally between these two layers raises health visits by 61% compared to unilateral allocations, and uniquely improves health service provision and health outcomes. We provide reduced form and structural evidence that effort complementarities and contractual frictions drive these results, and explore the implications for the optimal design of incentive policies in multi-layered organizations.

Read the paper forthcoming in the Journal of Political Economics.