Monday, September 8, 2008

Incentive Design and Fruit Picking

Here's a really interesting article from Tim Harford at Slate describing a group of economists' efforts to design better incentive schemes for fruit picking at a British farm. The farmer figured out the obvious - pay by the piece of fruit picked; however, some other requirements were causing a problem. For example, the farmer had to ensure that all the workers made at least minimum wage, so he had to raise the piece rate at times when pickings were slim. But, it turns out under this system, the workers would monitor each other to discourage fast picking, resulting in the piece rate being raised. A simple solution was to have managers test-pick a field to gauge the difficulty and then set the piece rate. Picking productivity peaked.

Check out the article for a few other interesting solutions the economists came up with to increase productivity through better incentive schemes.

1 comment:

  1. Sounds like Reagin's "Trust, but verify" by having management run a test-pick.