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Dynamic Production Teams with Strategic Behavior

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  • Michele Breton, Pascal St-Amour and D. Vencatachellum

Abstract

We analyze the extent to which intergenerational teams provide information on workers' productivity in the long run. We use a dynamic stochastic framework where wages are reputation-based and consider three possible work arrangements. When agents can only work by themselves we show that some uncertainty persists on their productivity at the steady state. Next, our results indicate that when the same technological shocks affect all teammates, then forcing workers to work together reveals their productivity in the steady state. However, some uncertainty on agents' productivities persist in the long run when technological shocks differ across teammates. We also allow workers to choose between working on their own or in a team. In this case the problem falls in the class of dynamic games. We compute the Nash-equilibrium work strategies, the direction of inter-workers transfers and the steady-state distribution of wages and utility. Elective teams are preferred by high-productivity young workers when technological shocks are specific to each teammate, and maximize the expected utility of a young worker when shocks are perfectly correlated

Suggested Citation

  • Michele Breton, Pascal St-Amour and D. Vencatachellum, 2001. "Dynamic Production Teams with Strategic Behavior," Computing in Economics and Finance 2001 89, Society for Computational Economics.
  • Handle: RePEc:sce:scecf1:89
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    References listed on IDEAS

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    Cited by:

    1. Heski Bar-Isaac, 2007. "Something to prove: reputation in teams," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 495-511, June.
    2. Bäker, Agnes & Mertins, Vanessa, 2013. "Risk-sorting and preference for team piece rates," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 285-300.
    3. Michèle Breton & Pascal St-Amour & Désiré Vencatachellum, 2002. "Inter- vs Intra-generational Production Teams: A Young Worker's Perspective," CIRANO Working Papers 2002s-57, CIRANO.

    More about this item

    Keywords

    Dynamic Games; Reputation; Team Production;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other

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