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Mutual Monitoring in Teams: The Effects of Residual Claimancy and Reciprocity

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  • Samuel Bowles
  • Herbert Gintis

Abstract

Monitoring by peers in work teams, credit associations, partner- ships, local commons situations, and residential neighborhoods is often an effective means of attenuating incentive problems. Most explanations of the incentives to engage in mutual monitoring rely either on small group size or on a version of the Folk theorem with repeated interactions. We provide an explanation of mutual monitoring in single shot interactions among members of large teams. A key element of our approach is that when team members are residual claimants, some members are motivated by reciprocity norms to punish fellow members when they shirk. We provide evidence for the behavioral relevance of reciprocity norms and we explore the effects team size and the structure of information among team members on the efficacy of mutual monitoring. We conclude with some results specifying conditions under which mutual monitoring in teams provides an effective solution to incentive problems arising from incomplete contracting, as well as conditions under which mutual monitoring is likely to fail.

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Bibliographic Info

Paper provided by Santa Fe Institute in its series Research in Economics with number 98-08-074e.

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Date of creation: Aug 1998
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Handle: RePEc:wop:safire:98-08-074e

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Related research

Keywords: Monitoring; reciprocity;

References

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  1. Besley, T. & Coate, S., 1991. "Group Lending, Repayment Incentives And Social Collateral," Papers 152, Princeton, Woodrow Wilson School - Development Studies.
  2. Black, Jane & de Meza, David & Jeffreys, David, 1996. "House Price, the Supply of Collateral and the Enterprise Economy," Economic Journal, Royal Economic Society, vol. 106(434), pages 60-75, January.
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Cited by:
  1. Jeffrey Carpenter & Peter Matthews & Okomboli Ong’ong’a, 2004. "Why Punish? Social reciprocity and the enforcement of prosocial norms," Journal of Evolutionary Economics, Springer, vol. 14(4), pages 407-429, October.
  2. Carpenter, Jeffrey P. & Matthews, Peter Hans, 2004. "Social Reciprocity," IZA Discussion Papers 1347, Institute for the Study of Labor (IZA).
  3. Abigail Barr, 2003. "Risk Pooling, Commitment and Information: An experimental test of two fundamental assumptions," Working Papers 2082, The Field Experiments Website.
  4. Noussair, C.N. & Masclet, D. & Tucker, S. & Villeval, M..C, 2003. "Monetary and non-monetary punishment in the voluntary contributions mechanism," Open Access publications from Tilburg University urn:nbn:nl:ui:12-377951, Tilburg University.
  5. Marco Casari & Luigi Luini, 2005. "Group Cooperation Under Alternative Peer Punishment Technologies: An Experiment," Labsi Experimental Economics Laboratory University of Siena 002, University of Siena.
  6. Carpenter, Jeffrey P., 2007. "Punishing free-riders: How group size affects mutual monitoring and the provision of public goods," Games and Economic Behavior, Elsevier, vol. 60(1), pages 31-51, July.

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