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Harmful transparency in teams

Author

Listed:
  • Kanti Parimal Bag

    () (Department of Economics - NUS - National University of Singapore)

  • Nona Pepito

    () (ESSEC - ESSEC Business School - Essec Business School - Economics Department - Essec Business School, THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique)

Abstract

In a two-period continuous effort investment game as in Mohnen, et al. (2008), we demonstrate that peer transparency can be strictly harmful. This contrasts with Mohnen et al.'s result that transparency, through the observability of interim efforts, induces more effort and is thus beneficial if team members are inequity-averse. If, instead, preferences are standard utilitarian, the marginal benefit is decreasing and marginal cost is increasing in a player's own effort, then players' collective and individual efforts are strictly less with transparency than under non-transparency.

Suggested Citation

  • Kanti Parimal Bag & Nona Pepito, 2016. "Harmful transparency in teams," Working Papers hal-01282735, HAL.
  • Handle: RePEc:hal:wpaper:hal-01282735
    Note: View the original document on HAL open archive server: https://hal-essec.archives-ouvertes.fr/hal-01282735
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    File URL: https://hal-essec.archives-ouvertes.fr/hal-01282735/document
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    References listed on IDEAS

    as
    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. Eyal Winter, 2006. "Optimal incentives for sequential production processes," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 376-390, June.
    3. David Rahman, 2012. "But Who Will Monitor the Monitor?," American Economic Review, American Economic Association, vol. 102(6), pages 2767-2797, October.
    4. 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.
    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.
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    Keywords

    free-riding; Transparency; team; perfect substitution;

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