An experimental analysis of moral hazard in team

Francisco Costa

MPRA Paper from University Library of Munich, Germany

Abstract: This paper reports 5 laboratory sessions that analyze the effects of group sizes in the voluntary contribution mechanism, when contribution level is either complementary or substitute. The theorical argument is that each production function provides different incentives for the agent along scale changes. When contribution levels are substitutes, bigger groups provide more incentives for free-riders, thus reducing the contribution level, because of decreasing marginal contribution - the 1/N problem -, Kandel and Lazear (1992). On the other hand, if marginal contribution is independent of the group size, as the case where contributions are complementary, the public good provision may increase together with the group size, as in Adams (2002). Our experiment results show that for both production functions bigger groups reduce contribution level and that, when efforts are substitutes, the contribution level is significantly higher. (JEL: H41 J33 C92)

Keywords: moral hazard; teams; experimental economics; experiments; free ride; free; ride; group size; production functions (search for similar items in EconPapers)
JEL-codes: C92 H41 J33 M54 (search for similar items in EconPapers)
Date: 2005-12
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