An experimental analysis of moral hazard in team
AbstractThis paper reports 5 laboratory sessions that analyze the effects of group sizes in the voluntary contribution mechanism, when contribution level is either complementary or substitute. The theorical argument is that each production function provides different incentives for the agent along scale changes. When contribution levels are substitutes, bigger groups provide more incentives for free-riders, thus reducing the contribution level, because of decreasing marginal contribution - the 1/N problem -, Kandel and Lazear (1992). On the other hand, if marginal contribution is independent of the group size, as the case where contributions are complementary, the public good provision may increase together with the group size, as in Adams (2002). Our experiment results show that for both production functions bigger groups reduce contribution level and that, when efforts are substitutes, the contribution level is significantly higher. (JEL: H41 J33 C92)
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2958.
Date of creation: Dec 2005
Date of revision:
moral hazard; teams; experimental economics; experiments; free ride; free; ride; group size; production functions;
Find related papers by JEL classification:
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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