"The Erosion and Sustainability of Norms and Morale" (in Japanese)

Michihiro Kandori

No CIRJE-J-94, CIRJE J-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 effort 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: 24 pages
Date: 2003-05
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:tky:jseres:2003cj94

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