Efficient Inequity–Averse Teams

Jianpei Li

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: This paper analyzes the efficiency of team production when agents exhibit other regarding preferences. It is shown that full efficiency can be sustained as an equilibrium through a budget-balancing mechanism that punishes some randomly chosen agents if output falls short of efficient level but distributes the output equally otherwise, provided that the agents are sufficiently inequity averse.

Keywords: moral hazard; team production; inequity aversion (search for similar items in EconPapers)
JEL-codes: C7 D63 D7 L2 (search for similar items in EconPapers)
Date: 2007-05
New Economics Papers: this item is included in nep-bec and nep-spo
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:210

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