Collaborating

Bonatti, Alessandro; Horner, Johannes

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Collaborating

Cowles Foundation Discussion Paper No. 1695

103 Pages Posted: 4 May 2009 Last revised: 2 Dec 2009

See all articles by Alessandro Bonatti

Alessandro Bonatti

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Johannes Horner

Yale University - Cowles Foundation

Date Written: November 30, 2009

Abstract

This paper examines moral hazard in teams over time. Agents are collectively engaged in an uncertain project, and their individual efforts are unobserved. Free-riding leads not only to a reduction in effort, but also to procrastination. The collaboration dwindles over time, but never ceases as long as the project has not succeeded. In fact, 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.

Keywords: Moral hazard, Teams, Experimentation, Collaboration, Public goods, Learning

JEL Classification: C72, C73, D83

Suggested Citation: Suggested Citation

Bonatti, Alessandro and Horner, Johannes, Collaborating (November 30, 2009). Cowles Foundation Discussion Paper No. 1695, Available at SSRN: https://ssrn.com/abstract=1396261