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Harmful transparency in teams

Author

Listed:
  • Bag, Kanti Parimal

    (National University of Singapore, Faculty of Arts and Social Sciences, Department of Economics)

  • Pepito, Nona

    (Essec business school)

Abstract

In a two-period continuous effort investment game as in Mohnen, et al. (2008), we demonstrate that peer transparency can be strictly harmful. This contrasts with Mohnen et al.'s result that transparency, through the observability of interim efforts, induces more effort and is thus beneficial if team members are inequity-averse. If, instead, preferences are standard utilitarian, the marginal benefit is decreasing and marginal cost is increasing in a player's own effort, then players' collective and individual efforts are strictly less with transparency than under non-transparency.

Suggested Citation

  • Bag, Kanti Parimal & Pepito, Nona, 2016. "Harmful transparency in teams," ESSEC Working Papers WP1603, ESSEC Research Center, ESSEC Business School.
    • Handle: RePEc:ebg:essewp:dr-16003
    as

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    File URL: https://hal-essec.archives-ouvertes.fr/hal-01282735/document
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    References listed on IDEAS

    as
    1. Alwine Mohnen & Kathrin Pokorny & Dirk Sliwka, 2008. "Transparency, Inequity Aversion, and the Dynamics of Peer Pressure in Teams: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 693-720, October.
    2. Romano, Richard & Yildirim, Huseyin, 2005. "On the endogeneity of Cournot-Nash and Stackelberg equilibria: games of accumulation," Journal of Economic Theory, Elsevier, vol. 120(1), pages 73-107, January.
    3. Parimal Kanti Bag & Nona Pepito, 2012. "Peer Transparency In Teams: Does It Help Or Hinder Incentives?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1257-1286, November.
    4. Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
    5. Eyal Winter, 2006. "Optimal incentives for sequential production processes," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 376-390, June.
    6. David Rahman, 2012. "But Who Will Monitor the Monitor?," American Economic Review, American Economic Association, vol. 102(6), pages 2767-2797, October.
    7. Eyal Winter, 2010. "Transparency and incentives among peers," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 504-523, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    free-riding; transparency; team; perfect substitution;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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    This paper has been announced in the following NEP Reports:

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