DP18477 The Allocation of Incentives in Multi-Layered Organizations: Evidence from a Community Health Program in Sierra Leone
Does the allocation of incentives across the hierarchy of an organization matter for its performance? In a field experiment with a large public-health organization in Sierra Leone, we find that healthcare provision is highly affected by how incentives are allocated between frontline workers and their supervisors. Sharing incentives equally be- tween these two layers raises completed health visits by 61% compared to the unilateral allocations that are typical in public-health organizations. Also, the shared incentives uniquely improve overall health service provision and health outcomes. We provide reduced form and structural evidence that these results are driven by a combination of effort complementarities and contractual frictions, and we explore the implications of these forces for the optimal design of incentive policies in multi-layered organizations.