American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Collaborating
American Economic Review
vol. 101,
no. 2, April 2011
(pp. 632–63)
Abstract
This paper examines moral hazard in teams over time. Agents are collectively engaged in a project whose duration and outcome are uncertain, and their individual efforts are unobserved. Free-riding leads not only to a reduction in effort, but also to procrastination. Collaboration among agents dwindles over time, but does not cease as long as the project has not succeeded. In addition, the delay until the project succeeds, if it ever does, increases with the number of agents. We show why deadlines, but not necessarily better monitoring, help to mitigate moral hazard. (JEL D81, D82, D83)Citation
Bonatti, Alessandro, and Johannes Hörner. 2011. "Collaborating." American Economic Review, 101 (2): 632–63. DOI: 10.1257/aer.101.2.632Additional Materials
JEL Classification
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D82 Asymmetric and Private Information
- D83 Search; Learning; Information and Knowledge; Communication; Belief