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Dynamic production teams with strategic behavior

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Author Info

  • Breton, Michele
  • St-Amour, Pascal
  • Vencatachellum, Desire

Abstract

We analyze the extent to which intergenerational teams provide information on workers' productivity in the long run. We use a dynamic stochastic framework where wages are reputation-based and consider three possible work arrangements. When agents can only work by themselves we show that some uncertainty persists on their productivity at the steady state. Next, our results indicate that when the same technological shocks affect all teammates, then forcing workers to work together reveals their productivity in the steady state. However, some uncertainty on agents' productivities persist in the long run when technological shocks differ across teammates. We also allow workers to choose between working on their own or in a team. In this case the problem falls in the class of dynamic games. We compute the Nash-equilibrium work strategies, the direction of inter-workers transfers and the steady-state distribution of wages and utility. Elective teams are preferred by high-productivity young workers when technological shocks are specific to each teammate, and maximize the expected utility of a young worker when shocks are perfectly correlated

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 27 (2003)
Issue (Month): 5 (March)
Pages: 875-905

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Handle: RePEc:eee:dyncon:v:27:y:2003:i:5:p:875-905

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  1. Wolinsky, Asher, 1987. "Matching, search, and bargaining," Journal of Economic Theory, Elsevier, vol. 42(2), pages 311-333, August.
  2. Laband, David N. & Piette, Michael J., 1995. "Team production in economics: division of labor or mentoring?," Labour Economics, Elsevier, vol. 2(1), pages 33-40, March.
  3. Hori, Hajime, 1997. "Dynamic Allocation in an Altruistic Overlapping Generations Economy," Journal of Economic Theory, Elsevier, vol. 73(2), pages 292-315, April.
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  9. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
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  11. Goenka, Aditya & Kelly, David L. & Spear, Stephen E., 1998. "Endogenous Strategic Business Cycles," Journal of Economic Theory, Elsevier, vol. 81(1), pages 97-125, July.
  12. Kandori, Michihiro, 1992. "Repeated Games Played by Overlapping Generations of Players," Review of Economic Studies, Wiley Blackwell, vol. 59(1), pages 81-92, January.
  13. McAfee, R Preston & McMillan, John, 1991. "Optimal Contracts for Teams," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 561-77, August.
  14. Esteban Joan Maria & Sakovics Jozsef, 1993. "Intertemporal Transfer Institutions," Journal of Economic Theory, Elsevier, vol. 61(2), pages 189-205, December.
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  16. Rosenzweig, Mark R & Wolpin, Kenneth I, 1994. "Parental and Public Transfers to Young Women and Their Children," American Economic Review, American Economic Association, vol. 84(5), pages 1195-1212, December.
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Cited by:
  1. Bäker, Agnes & Mertins, Vanessa, 2013. "Risk-sorting and preference for team piece rates," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 285-300.
  2. Michèle Breton & Pascal St-Amour & Désiré Vencatachellum, 2002. "Inter- vs Intra-generational Production Teams: A Young Worker's Perspective," CIRANO Working Papers 2002s-57, CIRANO.

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