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  4. November 2019
  5. Teamwork as a Self-Disciplining Device

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

Teamwork as a Self-Disciplining Device

  • Matthias Fahn
  • Hendrik Hakenes
American Economic Journal: Microeconomics
vol. 11, no. 4, November 2019
(pp. 1–32)
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Abstract

We show that team formation can serve as an implicit commitment device to overcome problems of self-control. If individuals have present-biased preferences, effort that is costly today but rewarded at some later point in time is too low from the perspective of an individual's long-run self. If agents interact repeatedly and can monitor each other, a relational contract involving teamwork can help to improve performance. The mutual promise to work harder is credible because the team breaks up after an agent has not kept this promise, which leads to individual underproduction in the future, reducing future utility.

Citation

Fahn, Matthias, and Hendrik Hakenes. 2019. "Teamwork as a Self-Disciplining Device." American Economic Journal: Microeconomics, 11 (4): 1–32. DOI: 10.1257/mic.20160217

Additional Materials

JEL Classification

  • D11 Consumer Economics: Theory
  • D71 Social Choice; Clubs; Committees; Associations
  • D86 Economics of Contract: Theory
  • M54 Personnel Economics: Labor Management
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