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The Economics of Shame in Work Groups: How Mutual Monitoring Can Decrease Cooperation in Teams

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  • Shepley W. Orr

Abstract

Recent economic theory suggests that free riding under group piece‐rate incentive schemes can be alleviated by mutual monitroing and social sanctioning. This article challenges this assumption by showing that the presence of the price mechanism in mutual monitoring and sanctioning can decrease the motivation to cooperate for certain types of agents: because the social rewards for cooperation that may develop through work are potentially based in a desire for pecuniary gain, withholding approval may matter less to initially cooperative agents. Hence, mutual monitoring can decrease cooperation in teams. The author presents evidence from social psychology illuminating differences between indiividualistic and cooperative types, discusses implications for work group design and future research, and presents a short mathematical model.

Suggested Citation

  • Shepley W. Orr, 2001. "The Economics of Shame in Work Groups: How Mutual Monitoring Can Decrease Cooperation in Teams," Kyklos, Wiley Blackwell, vol. 54(1), pages 49-66, February.
    • Handle: RePEc:bla:kyklos:v:54:y:2001:i:1:p:49-66
    DOI: 10.1111/1467-6435.00140
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    Cited by:

    1. John S. Heywood & Uwe Jirjahn, 2014. "Variable Pay, Industrial Relations and Foreign Ownership: Evidence from Germany," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 521-552, September.
    2. Green, Colin P. & Heywood, John S., 2010. "Profit sharing and the quality of relations with the boss," Labour Economics, Elsevier, vol. 17(5), pages 859-867, October.
    3. Thommes, Kirsten & Vyrastekova, Jana & Akkerman, Agnes, 2015. "Behavioral spillovers from freeriding in multilevel interactions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 56(C), pages 78-87.
    4. Michalis Drouvelis & Johannes Jarke-Neuert & Johannes Lohse, 2021. "Should transparency be (in-)transparent? On monitoring aversion and cooperation in teams," Papers 2112.12621, arXiv.org.
    5. repec:lan:wpaper:3014 is not listed on IDEAS
    6. Jacek Miroński, 2005. "Relacja agencji w teorii przedsiębiorstwa," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 1-16.
    7. Brice Corgnet & Roberto Hernán-González & Stephen Rassenti, 2011. "Real Effort, Real Leisure and Real-time Supervision: Incentives and Peer Pressure in Virtual Organizations," Working Papers 11-05, Chapman University, Economic Science Institute.
    8. repec:lan:wpaper:2920 is not listed on IDEAS
    9. Felix Bolduan & Ivo Schedlinsky & Friedrich Sommer, 2021. "The influence of compensation interdependence on risk-taking: the role of mutual monitoring," Journal of Business Economics, Springer, vol. 91(8), pages 1125-1148, October.
    10. Luigi Mittone & Francesca Bortolami, 2007. "Free riding and norms of control: self determination and imposition. An experimental comparison," CEEL Working Papers 0704, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    11. Tan, Jonathan H.W. & Zizzo, Daniel John, 2008. "Groups, cooperation and conflict in games," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(1), pages 1-17, February.
    12. Thomas Cornelissen & John Heywood & Uwe Jirjahn, 2014. "Reciprocity and Profit Sharing: Is There an Inverse U-shaped Relationship?," Journal of Labor Research, Springer, vol. 35(2), pages 205-225, June.
    13. Jonathan Levy, 2021. "Mutual monitoring, approval motivation and fostering cooperation in teams," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 7(1), pages 74-87, September.
    14. Margit Osterloh & Bruno S. Frey, "undated". "Corporate Governance for Crooks? The Case for Corporate Virtue," IEW - Working Papers 164, Institute for Empirical Research in Economics - University of Zurich.
    15. repec:lan:wpaper:3169 is not listed on IDEAS

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