IDEAS home Printed from https://ideas.repec.org/p/mpg/wpaper/2011_13.html
   My bibliography  Save this paper

Procrastination in Teams, Contract Design and Discrimination

Author

Listed:
  • Philipp Weinschenk

    (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

We study a dynamic model of team production with moral hazard. We show that the players begin to invest effort only shortly before the time limit when the reward for solving the task is shared equally. We explore how the team can design contracts to mitigate this form of procrastination and show that the second-best optimal contract is discriminatory. We investigate how limited liability or the threat of sabotage influences the team’s problem. It is further shown that players who earn higher wages can be worse off than teammates with lower wages and that present-biased preferences can mitigate procrastination.

Suggested Citation

  • Philipp Weinschenk, 2011. "Procrastination in Teams, Contract Design and Discrimination," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2011_13, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2011_13
    as

    Download full text from publisher

    File URL: http://www.coll.mpg.de/pdf_dat/2011_13online.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Eric Rasmusen, 1987. "Moral Hazard in Risk-Averse Teams," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 428-435, Autumn.
    2. Roy Radner, 1986. "Repeated Partnership Games with Imperfect Monitoring and No Discounting," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(1), pages 43-57.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Procrastination in team work
      by Economic Logician in Economic Logic on 2011-08-12 19:03:00

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. De Marco, Giuseppe & Immordino, Giovanni, 2013. "Partnership, reciprocity and team design," Research in Economics, Elsevier, vol. 67(1), pages 39-58.
    2. Battaglini, Marco, 2006. "Joint production in teams," Journal of Economic Theory, Elsevier, vol. 130(1), pages 138-167, September.
    3. Weinschenk, Philipp, 2016. "Procrastination in teams and contract design," Games and Economic Behavior, Elsevier, vol. 98(C), pages 264-283.
    4. Patrick Legros & Steven A. Matthews, 1993. "Efficient and Nearly-Efficient Partnerships," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 599-611.
    5. Raul V. Fabella, 2013. "Moral Hazard and Cooperation in Competing Teams," UP School of Economics Discussion Papers 201308, University of the Philippines School of Economics.
    6. Hendrik Hakenes & Svetlana Katolnik, 2018. "Optimal Team Size and Overconfidence," Group Decision and Negotiation, Springer, vol. 27(4), pages 665-687, August.
    7. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 465-497, June.
    8. Raul V. Fabella, 2013. "Salience and Cooperation Among Rational Egoists," UP School of Economics Discussion Papers 201309, University of the Philippines School of Economics.
    9. Miller, Nolan H., 1997. "Efficiency in Partnerships with Joint Monitoring," Journal of Economic Theory, Elsevier, vol. 77(2), pages 285-299, December.
    10. Blume, Andreas & Franco, April Mitchell, 2007. "Decentralized learning from failure," Journal of Economic Theory, Elsevier, vol. 133(1), pages 504-523, March.
    11. Karp, Larry, 1998. "Nonpoint Source Pollution Taxes and Excessive Tax Burden," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4z62b52k, Department of Agricultural & Resource Economics, UC Berkeley.
    12. Harry Watson, 1989. "An Analysis of the Formation and Behavior of Partnerships," Public Finance Review, , vol. 17(3), pages 281-303, July.
    13. Dunia López-Pintado & Juan D. Moreno-Ternero, 2011. "On the optimal management of teams under budget constraints," Working Papers 11.11, Universidad Pablo de Olavide, Department of Economics.
    14. Dass, Nishant & Nanda, Vikram & Wang, Qinghai, 2013. "Allocation of decision rights and the investment strategy of mutual funds," Journal of Financial Economics, Elsevier, vol. 110(1), pages 254-277.
    15. Mitchell, Paul David, 1999. "The theory and practice of green insurance: insurance to encourage the adoption of corn rootworm IPM," ISU General Staff Papers 1999010108000013154, Iowa State University, Department of Economics.
    16. Roland Kirstein & Birgit Will, 2006. "Efficient compensation for employees' inventions," European Journal of Law and Economics, Springer, vol. 21(2), pages 129-148, April.
    17. Matthias Lang, 2023. "Stochastic contracts and subjective evaluations," RAND Journal of Economics, RAND Corporation, vol. 54(1), pages 104-134, March.
    18. Mauricio S. Bugarin, 2015. "Efficiency in a Monotonic Partnership with Investment: An Endogenous Implementation of Holmstrom’s Principal," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 4(3), pages 127-135, September.
    19. Breton, Michele & St-Amour, Pascal & Vencatachellum, Desire, 2003. "Dynamic production teams with strategic behavior," Journal of Economic Dynamics and Control, Elsevier, vol. 27(5), pages 875-905, March.
    20. Rudolf Kerschbamer & Muriel Niederle & Josef Perktold, 2000. "Market Institutions and Quality Enforcement," Econometric Society World Congress 2000 Contributed Papers 1482, Econometric Society.

    More about this item

    Keywords

    Moral Hazard; team production; partnerships; procrastination; contract design; discrimination;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Economic Logic blog

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mpg:wpaper:2011_13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marc Martin (email available below). General contact details of provider: https://edirc.repec.org/data/mppggde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.