The Fear of Exclusion: Individual Effort when Group Formation is Endogenous

Kjell Arne Brekke, Karine Nyborg and Mari Rege

No 09/2005, Memorandum from Oslo University, Department of Economics

Abstract: To secure their membership in a popular group, individuals may contribute more to the group’s local public good than they would if group formation were exogenous. Those in the most unpopular group do not have this incentive to contribute to their group. Substantial differences in individual efforts levels between groups may be the result. A principal may prefer either exogenous or endogenous group formation, depending on whether an increase in contributions to the local public good coincides with the principal’s interests. We analyze two examples: Social interaction in schools, and multiple-task teamwork.

Keywords: Local public goods; opportunity costs; popularity; multiple-task principalagent analysis. (search for similar items in EconPapers)
JEL-codes: C72 D11 D23 L24 Z13 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2005-04-21
New Economics Papers: this item is included in nep-bec and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Scandinavian Journal of Economics, 2007, pages 531-550.

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Related works:
Journal Article: The Fear of Exclusion: Individual Effort when Group Formation is Endogenous* (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:osloec:2005_009

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