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The Erosion and Sustainability of Norms and Morale

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  • Michihiro Kandori

Abstract

The initially high performance of a socioeconomic organization is quite often subject to gradual erosion over time. We present a simple model which captures such a phenomenon. We assume that players are partly motivated by certain psychological factors, norms and morale, and they are willing to exert extra effort if others do so. This results in a "continuum" of equilibrium effort levels, whose minimum corresponds to the Nash equilibrium with respect to the material incentives. We show that repeated random shocks induce the erosion of equilibrium e ort levels, but they do not completely decay; in the long run a certain range of efforts are sustainable. Our model shows that different organizations typically enjoy diverse norms and morale, which persist for a long time, in the vicinity of the equilibrium determined by material incentives.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 506439000000000030.

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Date of creation: 15 Sep 2002
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Handle: RePEc:cla:levarc:506439000000000030

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Cited by:
  1. Charles Figuières & David Masclet & Marc Willinger, 2013. "Weak Moral Motivation Leads to the Decline of Voluntary Contributions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(5), pages 745-772, October.
  2. Sandner, Kai, 2008. "Balancing Performance Measures When Agents Behave Competitively in an Environment With Technological Interdependencies," Discussion Papers in Business Administration 2113, University of Munich, Munich School of Management.
  3. Jakub Steiner, 2006. "Strong Enforcement by a Weak Authority," ESE Discussion Papers 149, Edinburgh School of Economics, University of Edinburgh.

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