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Individual Accountability in Teams

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We consider a team production problem in which the principal observes only the group output and not individual effort and in which the principal can only penalize an agent for poor performance if she has verifiable evidence that the agent in question did not fulfill his job assignment. In this environment, agents have an incentive to shirk. However, we show that by including monitoring in the agents' job assignments, the principal induces the agents to exert effort and achieves the first-best. In particular, even though equilibrium job assignments include monitoring, this serves only to provide incentives for effort, and agents do not engage in wasteful monitoring in equilibrium.

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  • Leslie M. Marx & Francesco Squintani, 2002. "Individual Accountability in Teams," RCER Working Papers 494, University of Rochester - Center for Economic Research (RCER).
  • Handle: RePEc:roc:rocher:494
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    Cited by:

    1. Joyee Deb & Jin Li & Arijit Mukherjee, 2015. "Relational Contracts with Subjective Peer Evaluations," Cowles Foundation Discussion Papers 1995, Cowles Foundation for Research in Economics, Yale University.
    2. Herrera, Helios & Reuben, Ernesto & Ting, Michael M., 2017. "Turf wars," Journal of Public Economics, Elsevier, vol. 152(C), pages 143-153.
    3. Ravi Bapna & Anitesh Barua & Deepa Mani & Amit Mehra, 2010. "Research Commentary ---Cooperation, Coordination, and Governance in Multisourcing: An Agenda for Analytical and Empirical Research," Information Systems Research, INFORMS, vol. 21(4), pages 785-795, December.
    4. Uwe Jirjahn & Erik Poutsma, 2013. "The Use of Performance Appraisal Systems: Evidence from Dutch Establishment Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(4), pages 801-828, October.
    5. Uwe Jirjahn & Kornelius Kraft, 2010. "Teamwork And Intra‐Firm Wage Dispersion Among Blue‐Collar Workers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(4), pages 404-429, September.

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    More about this item

    Keywords

    Individual Liability; Moral Hazard in Teams;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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