Teamwork as a Self-Disciplining Device

Matthias Fahn and Hendrik Hakenes
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Hendrik Hakenes: University of Bonn and CEPR

No 42, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We show that team formation can serve as an implicit commitment device to overcome problems of self-control. If individuals have present-biased preferences, effort that is costly today but rewarded at some later point in time is too low from the perspective of an individual\'s long-run self. If agents interact repeatedly and can monitor each other, a relational contract involving teamwork can help to improve performance. The mutual promise to work harder is credible because the team breaks up after an agent has not kept this promise - which leads to individual underproduction in the future and hence a reduction of future utility.

Keywords: self-control problems; teamwork; relational contracts (search for similar items in EconPapers)
JEL-codes: L22 L23 (search for similar items in EconPapers)
Date: 2017-07-27
New Economics Papers: this item is included in nep-dem, nep-hrm, nep-ind and nep-mic
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Related works:
Journal Article: Teamwork as a Self-Disciplining Device (2019)
Working Paper: Teamwork as a Self-Disciplining Device (2017)
Working Paper: Teamwork as a Self-Disciplining Device (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:42

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