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Peer Pressure and Partnerships


  • Kandel, Eugene
  • Lazear, Edward P


Partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie. But in organizations of any significant size, the free-rider effects would seem to choke off any motivational forces. This analysis explores how peer pressure operates and how factors such as profit sharing, shame, guilt, norms, mutual monitoring, and empathy interact to create incentives in the firm. The argument that Japanese firms enjoy team spirit because compensation is linked to overall profitability is analyzed. An explanation for the prevalence of partnerships among individuals in similar occupations is provided. Copyright 1992 by University of Chicago Press.

Suggested Citation

  • Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-817, August.
  • Handle: RePEc:ucp:jpolec:v:100:y:1992:i:4:p:801-17

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    References listed on IDEAS

    1. William Lott, 1983. "Are Women Economists at a Disadvantage in Publishing Journal Articles? A Methodological Comment," Eastern Economic Journal, Eastern Economic Association, vol. 9(2), pages 133-138, Apr-Jun.
    2. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-580, June.
    3. McDowell, John M & Melvin, Michael, 1983. "The Determinants of Co-Authorship: An Analysis of the Economics Literature," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 155-160, February.
    4. Garvey, Gerald T & Swan, Peter L, 1992. "Managerial Objectives, Capital Structure, and the Provision of Worker Incentives," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 357-379, October.
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