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Repeated Interaction in Teams: Tenure and Performance

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  • J. Miguel Villas-Boas

    (Haas School of Business, University of California, Berkeley, California 94720)

Abstract

Many of the activities performed in firms are done by teams, where a common output is observed, but outsiders cannot observe the individual contributions of each team member. This leads to the possibility of some of the members of the team free-riding on the contributions of others. Repeated interactions of a team can then potentially lead to cooperation among the members of the team under the credible threat of returning to a free-riding equilibrium. However, repeated interaction under cooperation of a team may lead to decreasing overall output over time because the benefits of the team working together may exogenously decrease over time. This then leads to the optimal duration of a team being finite but stochastic, creating inefficiency, but being sufficiently long so that the elements of the team have an incentive to cooperate. This provides a theory of successive team formation and termination in a firm. The possibility for a too long duration for full team cooperation may then lead the firm to reduce the extent of team cooperation, to be able to reduce the expected duration of a team, and have fewer losses of the team lasting for too long.

Suggested Citation

  • J. Miguel Villas-Boas, 2020. "Repeated Interaction in Teams: Tenure and Performance," Management Science, INFORMS, vol. 66(3), pages 1496-1507, March.
    • Handle: RePEc:inm:ormnsc:v:66:y:2020:i:3:p:1496-1507
    DOI: 10.1287/mnsc.2018.3228
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    3. He, Yong & Zhao, Xuan & Krishnan, Harish & Jin, Shibo, 2022. "Cooperation among suppliers of complementary products in repeated interactions," International Journal of Production Economics, Elsevier, vol. 252(C).

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