The Erosion and Sustainability of Norms and Morale

Michihiro Kandori

No CIRJE-F-169, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: The initially high performance of a socioeconomic organization is quite often subject to gradual erosion over time. We present a simple model which captures such a phenomenon. We assume that players are partly motivated by certain psychological factors, norms and morale, and they are willing to exert extra effort if others do so. This results in a "continuum" of equilibrium effort levels, whose minimum corresponds to the Nash equilibrium with respect to the material incentives. We show that repeated random shocks induce the erosion of equilibrium e ort levels, but they do not completely decay; in the long run a certain range of efforts are sustainable. Our model shows that different organizations typically enjoy diverse norms and morale, which persist for a long time, in the vicinity of the equilibrium determined by material incentives.

Pages: 29 pages
Date: 2002-09
New Economics Papers: this item is included in nep-cdm
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The Erosion and Sustainability of Norms and Morale (2003)
Working Paper: The Erosion and Sustainability of Norms and Morale (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2002cf169

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