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Harmful transparency in teams

Author

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  • Bag, Parimal Kanti
  • Pepito, Nona

Abstract

In a two-player team project with efforts over two rounds, we demonstrate that observability of peer efforts can be strictly harmful if preferences are utilitarian. This contrasts with Mohnen et al. (2000) who show in a similar setting that observability of interim efforts induces more efforts, if team members are inequity-averse.

Suggested Citation

  • Bag, Parimal Kanti & Pepito, Nona, 2016. "Harmful transparency in teams," Economics Letters, Elsevier, vol. 144(C), pages 88-91.
  • Handle: RePEc:eee:ecolet:v:144:y:2016:i:c:p:88-91
    DOI: 10.1016/j.econlet.2016.05.005
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    References listed on IDEAS

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    1. 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.
    2. Romano, Richard & Yildirim, Huseyin, 2005. "On the endogeneity of Cournot-Nash and Stackelberg equilibria: games of accumulation," Journal of Economic Theory, Elsevier, vol. 120(1), pages 73-107, January.
    3. Serrano, Roberto & Zapater, Inigo, 1998. "The Three-Legged Race: Cooperating to Compete," Games and Economic Behavior, Elsevier, vol. 22(2), pages 343-363, February.
    4. Abreu, Dilip & Milgrom, Paul & Pearce, David, 1991. "Information and Timing in Repeated Partnerships," Econometrica, Econometric Society, vol. 59(6), pages 1713-1733, November.
    5. Parimal Kanti Bag & Nona Pepito, 2012. "Peer Transparency In Teams: Does It Help Or Hinder Incentives?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1257-1286, November.
    6. Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
    7. Eyal Winter, 2006. "Optimal incentives for sequential production processes," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 376-390, June.
    8. David Rahman, 2012. "But Who Will Monitor the Monitor?," American Economic Review, American Economic Association, vol. 102(6), pages 2767-2797, October.
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    More about this item

    Keywords

    Transparency; Team; Perfect substitution; Free-riding;

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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