Peer transparency in teams: Does it help or hinder incentives?

• Main Authors: BAG, Parimal, PEPITO, Nona
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2012
• Subjects: Behavioral Economics; Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/2322; https://ink.library.smu.edu.sg/context/soe_research/article/3321/viewcontent/Peer_Transparency_in_Teams_Does_it_Help_or_Hinder_Incentives.pdf
• Institution: Singapore Management University

In a joint project involving two players of a two-round effort investment game with complementary efforts, transparency, by allowing players to observe each other's efforts, achieves at least as much, and sometimes more, collective and individual efforts relative to a nontransparent environment. Without transparency, multiple equilibria can arise, and transparency elimites the inferior equilibria. When full cooperation arises only under transparency, it occurs gradually: No worker sinks in the maximum amount of effort in the first round, preferring instead to smooth out contributions over time. If the players' efforts are substitutes, transparency makes no difference to equilibrium efforts.