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Rational Sabotage in Cooperative Production

In this paper we consider a model of cooperative production in which rational agents have the possibility to engage in sabotage activities that decrease output. It is shown that sabotage depends on the interplay between the degree of congestion, the technology of sabotage, the number of agents the degree of meritocracy and the form of the sharing rule. In particular it is shown that, ceteries paribus, meritocratic systems give more incentives to sabotage than egalitarian systems. We address two questions: The degree of meritocracy that is compatible with absence of sabotage and the existence of a Nash equilibrium with and without sabotage.

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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 541.02.

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Handle: RePEc:aub:autbar:541.02
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  1. Robert Gibbons, 1998. "Incentives in Organizations," NBER Working Papers 6695, National Bureau of Economic Research, Inc.
  2. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  3. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  4. Friedman, James W, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Wiley Blackwell, vol. 38(113), pages 1-12, January.
  5. Roemer John E. & Silvestre Joaquim, 1993. "The Proportional Solution for Economies with Both Private and Public Ownership," Journal of Economic Theory, Elsevier, vol. 59(2), pages 426-444, April.
  6. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-80, June.
  7. Martin J Osborne & Ariel Rubinstein, 2009. "A Course in Game Theory," Levine's Bibliography 814577000000000225, UCLA Department of Economics.
  8. Fabella, Raul V., 1988. "Natural team sharing and team productivity," Economics Letters, Elsevier, vol. 27(2), pages 105-110.
  9. Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, vol. 59(3), pages 611-36, May.
  10. Konrad, Kai A, 2000. "Sabotage in Rent-Seeking Contests," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(1), pages 155-65, April.
  11. Pfingsten, Andreas, 1991. "Surplus-sharing methods," Mathematical Social Sciences, Elsevier, vol. 21(3), pages 287-301, June.
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