Peer pressure and inequity aversion in the Japanese firm
AbstractWe present an explanation of the high frequency of team production and high level of peer monitoring found in Japanese firms, in terms of a simple and empirically grounded variation in individual utility functions. We argue that Japanese agents are generally characterized by a higher degree, with respect to their Western counterparts, of aversion to unfavorable inequality, a feature which explains seemingly puzzling experimental evidence. In combination with long term employment and various organizational practices, this creates the conditions for obtaining willingness to exert mutual monitoring and peer pressure which facilitates the convergence towards cooperative equilibria in dilemma type situations.
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Bibliographic InfoPaper provided by IESE Business School in its series IESE Research Papers with number D/645.
Length: 26 pages
Date of creation: 05 Sep 2006
Date of revision:
Team Production; Fairness; Cooperation; Punishment; Reciprocity;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-28 (All new papers)
- NEP-SEA-2006-10-28 (South East Asia)
- NEP-SOC-2006-10-28 (Social Norms & Social Capital)
- NEP-UPT-2006-10-28 (Utility Models & Prospect Theory)
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