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Rational Sabotage in Cooperative Production

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  • Luis C. Corchón
  • Carmen Beviá

Abstract

In this paper we consider a model of cooperative production in which rational agents have the possibility to engage in sabotage activities that decrease output. It is shown that sabotage depends on the interplay between the degree of congestion, the technology of sabotage, the number of agents the degree of meritocracy and the form of the sharing rule. In particular it is shown that, ceteries paribus, meritorcratic systems give more incentives to sabotage than egalitarian systems. We address two questions: The degree of meritocracy that is compatible with absence of sabotage and the existence of a Nash equilibrium with and without sabotage.

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File URL: http://e-archivo.uc3m.es/bitstream/10016/3581/1/CORCHON%20_WPUC3M_2002_CL.pdf
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Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we20021001.

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Date of creation: Oct 2002
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Handle: RePEc:cte:werepe:we20021001

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  1. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  2. Fabella, Raul V., 1988. "Natural team sharing and team productivity," Economics Letters, Elsevier, Elsevier, vol. 27(2), pages 105-110.
  3. Pfingsten, Andreas, 1991. "Surplus-sharing methods," Mathematical Social Sciences, Elsevier, Elsevier, vol. 21(3), pages 287-301, June.
  4. Friedman, James W, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 38(113), pages 1-12, January.
  5. Roemer John E. & Silvestre Joaquim, 1993. "The Proportional Solution for Economies with Both Private and Public Ownership," Journal of Economic Theory, Elsevier, Elsevier, vol. 59(2), pages 426-444, April.
  6. Konrad, Kai A, 2000. "Sabotage in Rent-Seeking Contests," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 16(1), pages 155-65, April.
  7. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(3), pages 561-80, June.
  8. Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, Econometric Society, vol. 59(3), pages 611-36, May.
  9. Robert Gibbons, 1998. "Incentives in Organizations," NBER Working Papers 6695, National Bureau of Economic Research, Inc.
  10. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262650401, December.
  11. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 7(0), pages 24-52, Special I.
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