Teamwork as a Self-Disciplining Device

Fahn, Matthias und Hakenes, Hendrik (2017): Teamwork as a Self-Disciplining Device. Collaborative Research Center Transregio 190, Discussion Paper No. 42

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 and hence a reduction of future utility.

• Item Type: Paper
• Keywords: self-control problems; teamwork; relational contracts
• Faculties: Economics > Collaborative Research Center Transregio "Rationality and Competition"
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: L22, L23
• Language: English