Peer Pressure and Moral Hazard in Teams: Experimental Evidence

Brice Corgnet, Roberto Hernan-Gonzalez and Stephen Rassenti
Authors registered in the RePEc Author Service: Roberto Hernán González

Review of Behavioral Economics, 2015, vol. 2, issue 4, 379-403

Abstract: Team incentives have been found to be particularly effective both in the lab and in the field despite the moral hazard in teams problem identified by Holmström (1982). In a newly developed virtual workplace, we show that, in line with Holmström, moral hazard in teams is indeed pervasive. Subsequently, we find strong evidence for the conjecture of Kandel and Lazear (1992) that peer pressure may resolve the moral hazard in teams problem. Organizations equipped with a very weak form of peer monitoring (anonymous and without physical proximity, verbal threats or face-to-face interactions) perform as well as those using individual incentives.

Keywords: Incentives; Free-riding; Peer pressure; Organization theory (search for similar items in EconPapers)
JEL-codes: C92 D23 M52 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (31)

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Related works:
Working Paper: Peer Pressure and Moral Hazard in Teams: Experimental Evidence (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlrbe:105.00000040

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