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Mutual Monitoring in Teams: Theory and Experimental Evidence on the Importance of Reciprocity

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  • Carpenter, Jeffrey P.

    () (Middlebury College)

  • Bowles, Samuel

    () (Santa Fe Institute)

  • Gintis, Herbert

    () (Central European University, Budapest)

Abstract

Monitoring by peers is often an effective means of attenuating incentive problems. Most explanations of the efficacy of mutual monitoring rely either on small group size or on a version of the Folk theorem with repeated interactions which requires reasonably accurate public information concerning the behavior of each player. We provide a model of team production in which the effectiveness of mutual monitoring depends not on these factors, but rather on strong reciprocity: the willingness of some team members to engage in the costly punishment of shirkers. This alternative does not require small group size or public signals. An experimental public goods game provides evidence for the behavioral relevance of strong reciprocity in teams.

Suggested Citation

  • Carpenter, Jeffrey P. & Bowles, Samuel & Gintis, Herbert, 2006. "Mutual Monitoring in Teams: Theory and Experimental Evidence on the Importance of Reciprocity," IZA Discussion Papers 2106, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2106
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    Cited by:

    1. Martin Sefton & Robert Shupp & James M. Walker, 2007. "The Effect Of Rewards And Sanctions In Provision Of Public Goods," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 671-690, October.
    2. Simon Gaechter & Benedikt Herrmann, 2006. "The limits of self-governance in the presence of spite: Experimental evidence from urban and rural Russia," Discussion Papers 2006-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    3. Rajiv Sethi & E. Somanathan, 2004. "Collective action in the commons: A theoretical framework for empirical research," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 04-21, Indian Statistical Institute, New Delhi, India.
    4. Jeffrey Carpenter & Peter Matthews, 2002. "Social Reciprocity," Middlebury College Working Paper Series 0229, Middlebury College, Department of Economics.
    5. Jeffrey Carpenter & Peter Matthews, 2009. "What norms trigger punishment?," Experimental Economics, Springer;Economic Science Association, vol. 12(3), pages 272-288, September.
    6. Agnès Festré & Pierre Garrouste, 2008. "L’analyse économique des normes sociales : une réévaluation de l’héritage hayékien," Revue Française d'Économie, Programme National Persée, vol. 22(4), pages 103-137.
    7. Peter Marko & Petr Svarc, 2008. "Firms formation and growth in the model with heterogeneous agents and monitoring," Working Papers IES 2008/31, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2008.
    8. Stefan Grosse & Louis Putterman & Bettina Rockenbach, 2007. "Monitoring In Teams: A Model and Experiment on the Central Monitor Hypothesis," Working Papers 2007-4, Brown University, Department of Economics.
    9. Agnès Festré & Pierre Garrouste, 2009. "The economic analysis of social norms: A reappraisal of Hayek’s legacy," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 22(3), pages 259-279, September.
    10. Fangfang Tan, 2008. "Punishment in a Linear Public Good Game with Productivity Heterogeneity," De Economist, Springer, vol. 156(3), pages 269-293, September.
    11. Cason, Timothy N. & Gangadharan, Lata & Maitra, Pushkar, 2012. "Moral hazard and peer monitoring in a laboratory microfinance experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 192-209.
    12. Carpenter, Jeffrey P., 2007. "Punishing free-riders: How group size affects mutual monitoring and the provision of public goods," Games and Economic Behavior, Elsevier, vol. 60(1), pages 31-51, July.
    13. Claude Meidinger & Jean-Louis Rullière & Marie-Claire Villeval, 2003. "Does Team-Based Compensation Give Rise to Problems When Agents Vary in Their Ability?," Experimental Economics, Springer;Economic Science Association, vol. 6(3), pages 253-272, November.
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    16. Brice Corgnet & Roberto Hernán-González & Stephen Rassenti, 2011. "Real Effort, Real Leisure and Real-time Supervision: Incentives and Peer Pressure in Virtual Organizations," Working Papers 11-05, Chapman University, Economic Science Institute.
    17. Alexandre Mas & Enrico Moretti, 2009. "Peers at Work," American Economic Review, American Economic Association, vol. 99(1), pages 112-145, March.
    18. Ricardo Crespo, 2008. "Reciprocity and practical comparability," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 55(1), pages 13-28, April.
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    More about this item

    Keywords

    punishment; team production; public good; monitoring; experiment;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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