Sustaining Cooperation Through Strategic Self-Interested Actions
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Francesco Lancia
Abstract
This paper studies how organizations seek to promote cooperation between their members when individual contributions to an organization’s output are imperfectly observable. It considers an overlapping-generations game in which members with conflicting interests expend effort in pursuing activities outside the organization, in addition to the effort they devote to increasing the organization’s output. We show that cooperation is easier to enforce when organizations link rewards and punishments to effort in outside activities. In the best public perfect equilibrium, effort in outside activities is distorted in order to signal a member’s willingness to cooperate inside the organization.
Acknowledgements
We thank the Editor Yuk-Fai Fong and two referees, as well as Alberto Bennardo, Daniel Garcia, Bård Harstad, David K. Levine, Anirban Mitra, Nicola Pavoni, Nicola Persico, Debraj Ray, Karl Schlag, Paolo Siconolfi, and Timothy Worrall for helpful suggestions. We also benefitted from comments made by participants in the 2nd Personnel Economics and Public Finance conference in Ravello, the 11th SAET meeting in Faro, the 17th ISNIE conference in Firenze, and the seminars at the EIEF and the universities of Amsterdam, Bergen, Bologna, Firenze, Innsbruck, Modena, Napoli, Oslo, and Vienna. We also acknowledge the support of an EIEF research grant and the European Research Council under the EU’s 7th Framework Programme, ERC GA no. 283236.
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© 2019 Walter de Gruyter GmbH, Berlin/Boston
Artikel in diesem Heft
- Research Articles
- Sustaining Cooperation Through Strategic Self-Interested Actions
- Endogenous Markup, Per Capita Income and Population Size in the Gravity Equation
- Profits Under Centralized Negotiations: The Efficient Bargaining Case
- Disentangling Intertemporal Substitution and Risk Aversion Under the Expected Utility Theorem
- Managerial Delegation Contracts, “Green” R&D and Emissions Taxation
- Entry Deterrence, Coordinating Advertising and Pricing in Markets with Consumption Externalities
- Do Time Preferences Matter in Intertemporal Consumption and Portfolio Decisions?
- From Jungle to Civilized Economy: The Power Foundation of Exchange Economy Equilibrium
- Endogenous Matching and Money with Random Consumption Preferences
- Notes
- An Asymmetric Duopoly Model of Price Framing
- A First Price Auction with an Arbitrary Number of Asymmetric Bidders
- Stable Matching with Double Infinity of Workers and Firms
Artikel in diesem Heft
- Research Articles
- Sustaining Cooperation Through Strategic Self-Interested Actions
- Endogenous Markup, Per Capita Income and Population Size in the Gravity Equation
- Profits Under Centralized Negotiations: The Efficient Bargaining Case
- Disentangling Intertemporal Substitution and Risk Aversion Under the Expected Utility Theorem
- Managerial Delegation Contracts, “Green” R&D and Emissions Taxation
- Entry Deterrence, Coordinating Advertising and Pricing in Markets with Consumption Externalities
- Do Time Preferences Matter in Intertemporal Consumption and Portfolio Decisions?
- From Jungle to Civilized Economy: The Power Foundation of Exchange Economy Equilibrium
- Endogenous Matching and Money with Random Consumption Preferences
- Notes
- An Asymmetric Duopoly Model of Price Framing
- A First Price Auction with an Arbitrary Number of Asymmetric Bidders
- Stable Matching with Double Infinity of Workers and Firms
