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Peer Pressure in Work Teams : The effects of Inequity Aversion

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  • David Masclet

    () (GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique)

Abstract

Many empirical studies have shed light on the efficiency of peer pressure. I propose here to model peer pressure by incorporating in the utility function self centered inequity aversion. I find that opportunity for sufficiently inequity averse players to punish their peers, is effective in inducing others to cooperate. At the equilibrium, all players cooperate and punish any shirker since punishing is a way to reduce inequity. Contrary, nobody cooperates without peer pressure even if players are inequity averse.

Suggested Citation

  • David Masclet, 2002. "Peer Pressure in Work Teams : The effects of Inequity Aversion," Post-Print halshs-00178476, HAL.
  • Handle: RePEc:hal:journl:halshs-00178476
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00178476
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    File URL: https://halshs.archives-ouvertes.fr/halshs-00178476/document
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    References listed on IDEAS

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    1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
    2. Jones, Derek C & Svejnar, Jan, 1985. "Participation, Profit Sharing, Worker Ownership and Efficiency in Italian Producer Cooperative," Economica, London School of Economics and Political Science, vol. 52(208), pages 449-465, November.
    3. Barron, John M & Gjerde, Kathy Paulson, 1997. "Peer Pressure in an Agency Relationship," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 234-254, April.
    4. Dirk Engelmann & Martin Strobel, 2000. "An Experimental Comparison of the Fairness Models by Bolton and Ockenfels and by Fehr and Schmidt," Econometric Society World Congress 2000 Contributed Papers 1229, Econometric Society.
    5. Hirshlifer, David & Rassmusen, Eric, 1989. "Cooperation in a repeated prisoners' dilemma with ostracism," Journal of Economic Behavior & Organization, Elsevier, vol. 12(1), pages 87-106, August.
    6. Rehder, Robert R., 1990. "Japanese transplants: After the honeymoon," Business Horizons, Elsevier, vol. 33(1), pages 87-98.
    7. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
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    Cited by:

    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. repec:spr:comaot:v:24:y:2018:i:1:d:10.1007_s10588-017-9244-6 is not listed on IDEAS
    3. Pedro Rey-Biel, 2008. "Inequity Aversion and Team Incentives," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 297-320, June.

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