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Peer pressure and inequity aversion in the Japanese firm

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  • Staffiero, Gianandrea

    ()
    (IESE Business School)

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    Abstract

    We 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 Info

    Paper provided by IESE Business School in its series IESE Research Papers with number D/645.

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    Length: 26 pages
    Date of creation: 05 Sep 2006
    Date of revision:
    Handle: RePEc:ebg:iesewp:d-0645

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    Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
    Web page: http://www.iese.edu/
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    Related research

    Keywords: Team Production; Fairness; Cooperation; Punishment; Reciprocity;

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    1. Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
    2. Barron, John M & Gjerde, Kathy Paulson, 1997. "Peer Pressure in an Agency Relationship," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 234-54, April.
    3. Cason, Timothy N. & Saijo, Tatsuyoshi & Yamato, Takehiko & Yokotani, Konomu, 2004. "Non-excludable public good experiments," Games and Economic Behavior, Elsevier, vol. 49(1), pages 81-102, October.
    4. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    5. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-17, August.
    6. Martin Sefton & Robert S. Shupp & James Walker, 2005. "The Effect of Rewards and Sanctions in Provision of Public Goods," Working Papers 200504, Ball State University, Department of Economics, revised Feb 2005.
    7. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    8. Ernst Fehr & Simon Gaechter, 2003. "Altruistic Punishment in Humans," Microeconomics 0305006, EconWPA.
    9. Simon Gachter & Ernst Fehr, 2000. "Cooperation and Punishment in Public Goods Experiments," American Economic Review, American Economic Association, vol. 90(4), pages 980-994, September.
    10. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    11. Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001. "Are people conditionally cooperative? Evidence from a public goods experiment," Economics Letters, Elsevier, vol. 71(3), pages 397-404, June.
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