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Peer Pressure in Work Teams : The effects of Inequity Aversion

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  • David Masclet

    ()
    (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)

Abstract

Many empirical studies have shed light on the efficiency of peer pressure. I propose here to model peer pressure by incorporating in the utility function self centered inequity aversion. I find that opportunity for sufficiently inequity averse players to punish their peers, is effective in inducing others to cooperate. At the equilibrium, all players cooperate and punish any shirker since punishing is a way to reduce inequity. Contrary, nobody cooperates without peer pressure even if players are inequity averse.

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Paper provided by HAL in its series Post-Print with number halshs-00178476.

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Date of creation: Dec 2002
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Handle: RePEc:hal:journl:halshs-00178476

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00178476/en/
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Related research

Keywords: cooperation; fairness; inequity aversion; peer pressure; work teams;

References

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  1. Fehr, Ernst & Schmidt, Klaus M., . "A theory of fairness, competition, and cooperation," Chapters in Economics, University of Munich, Department of Economics.
  2. Engelmann, Dirk & Strobel, Martin, 2000. "An experimental comparison of the fairness models by Bolton and Ockenfels and by Fehr and Schmidt," SFB 373 Discussion Papers 2000,28, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  3. JONES, Derek C. & SVEJNAR, Jan, . "Participation, profit sharing, worker ownership and efficiency in Italian producer cooperatives," CORE Discussion Papers RP -681, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. 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.
  5. Rehder, Robert R., 1990. "Japanese transplants: After the honeymoon," Business Horizons, Elsevier, vol. 33(1), pages 87-98.
  6. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
  7. Hirshlifer, David & Rassmusen, Eric, 1989. "Cooperation in a repeated prisoners' dilemma with ostracism," Journal of Economic Behavior & Organization, Elsevier, vol. 12(1), pages 87-106, August.
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Cited by:
  1. Pedro Rey Biel, 2004. "Inequity aversion and team incentives," Microeconomics 0407009, EconWPA.
  2. 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.

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